TEACHERS UNIT-LINKED

Teachers unit-linked policies investment information

REPORT OVERVIEW

Before we get started...

  • This information does not constitute investment advice and we recommend that you speak to a suitably qualified financial adviser before making any investment decision based upon this, or any other information.
  • The information below gives an overview of the performance of the assets held in the Teachers unit-linked funds for the period 1 January 2021 to 31 December 2021. 

Market and Economic Review

This review is based on information and commentary provided by Columbia Threadneedle Investments

Global equities rose at a double-digit pace in 2021, even as volatility increased towards the end of the year. After a weak start in January, shares notched seven straight monthly gains, driven by robust corporate profits, ultra-loose monetary policy, the rollout of Covid vaccines and optimism about further US fiscal stimulus. From September onwards however, performance was more mixed as central banks in developed markets looked to address rising inflation concerns. Volatility spiked in November amid concerns about a rapid rise in Covid cases driven by the new Omicron variant. Nonetheless, equities ended the year strongly, posting a gain in December and trading near record highs. Commodities (natural resources and agricultural products) also ended the year strongly, lifted by pandemic-related supply bottlenecks and the positive demand implications of economic reopening. Core government bond markets posted negative returns as accelerating inflation fostered anticipation of higher interest rates. Corporate debt held up better; the positive earnings backdrop and a low default rate helping.

The pandemic continued to dominate investor sentiment over the period. Developed markets countries rolled out vaccines in the first few months of the year with relative smoothness, helping to promote a revival in economic activity, which bolstered equities. Less positively, initial progress was slow in many emerging markets, but some Asian countries made good headway later in the year. But there was some relief as initial evidence suggested that Omicron, while highly contagious, was relatively mild in effect and caused fewer hospitalisations and deaths.

A shift in the outlook for monetary policy was a prominent theme of the year as inflation readings in numerous countries indicated that prices were rising swiftly. During the initial months, the key developed markets central banks argued that higher prices would likely prove to be temporary and maintained their ultra-loose policies, continuing monetary stimulus and holding their key interest rates near or below zero. The picture began to change around mid-year as inflation continued to accelerate, rising well above official targets in the US, the UK and the Eurozone. As the year came to a close, core developed markets central banks made a dramatic shift toward tightening policy: just days apart in mid-December, the Federal Reserve in the US projected as many as three rate hikes before the end of 2023, while the UK’s Bank of England raised rates for the first time since 2018 and the European Central Bank laid out plans to end their pandemic stimulus programme.

Teachers unit-linked funds performance review

The Teachers unit-linked funds are invested in by a range of Teachers pension and investment products

The MSCI All Country World Index, a measure of global equities, returned 20.1% in Sterling terms. The level of investments in the US and Europe benefitted the fund where stocks were lifted by stimulus-related optimism and strong corporate profits. In Europe, stock selection further accelerated performance. UK equities performed strongly but below the global average. The other dominant theme of the year was slowing economic growth in China exacerbated by high borrowing in the Chinese property sector and regulatory clampdowns in pursuit of ‘common prosperity’. Throughout the year we maintained a reduced investment in China which offset some but not all the poor performance in Emerging Markets and Asia. 

In core government bond markets, yields rose (meaning prices fell) owing to rising inflation and anticipation that key central banks would rein in their stimulus measures. Our allocation in government bonds – especially Gilts – has been below that of the funds’ benchmark; this decision has helped to cushion the underperformance. 

Corporate bonds proved more resilient, helped by generally robust earnings and a low default rate. Over the year we favoured High Yield bonds which delivered a positive return over Investment Grade bonds which were slightly negative. 

Unit price history – Teachers unit-linked policies

The tables below show the unit prices, at the end of each of the last five calendar years, for unit-linked funds available for the following Teachers unit linked products:

  • Capital Investment Bond
  • Investment Bond
  • Flexible Savings Plan
  • Personal Pension Plan
  • Free Standing Additional Voluntary Contribution Scheme (FSAVC) 
  • Stakeholder Pension
Capital Investment Bond, Investment Bond and Flexible Savings Plan
Personal Pension Plan and Free Standing Additional Voluntary Contributions (FSAVC)
Stakeholder Pension Plan

Asset allocation

Here you can find the types of asset that each of the Teachers unit linked funds invest in.

Further information

For more information on how Teachers unit-linked policies work please refer to:

Columbia Threadneedle Investments

Since 1 February 2019 the asset management of Teachers funds has been undertaken on our behalf by Columbia Threadneedle Investments. Columbia Threadneedle is responsible for the day to day management of the assets within investment guidelines set by LV=.

Columbia Threadneedle is a leading international investment manager that manages £557bn of assets (as at 31 December 2021), investing on behalf of individuals, pension funds, insurers and corporations. Columbia Threadneedle is the global asset management group of Ameriprise Financial, a leading US-based financial services provider.