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TEACHERS WITH-PROFITS

Teachers with-profits 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 funds for Teachers with-profits policyholders, for the period 1 January 2022 to 31 December 2022.

2022 performance review

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

2022 was a difficult year for the fund as returns on both equities and bonds were negative. In investment markets, global equities were down 15.6% whilst global bonds fell 16.3%.

Performance over the year was driven by inflationary fears. Interest rates rose significantly over the year with the ten year Gilt Yield rising (meaning prices fell). Rising interest rates negatively impacts bond performance. Through this period whilst we held a reduced investment in government and corporate bonds we retained an allocation to provide resilience if a deep recessionary environment started to appear.

Within equities, energy was the only sector that was generally positive whilst the others were negative. Whilst we have some energy sector investments, they are limited. This has hampered performance over the year. We believe holding limited energy sector investments is appropriate given the Environmental, Social and Governance (ESG) risks over the medium term where oil and energy companies will face rising costs of capital compared to greener industries.

It has been a buoyant year for the US dollar which, at one point, was up 26.6% since the start of 2022. Within our investments, we intentionally hedge (a way of reducing the risk of loss due to currency value fluctuations) away some of our overseas currency investments including the US dollar. This has meant that we have missed out on the strong performance of the US Dollar over 2022. However, our strategic positioning is based on the medium term (three to five years) and longer (circa ten years) and over that period, even with the strong US Dollar in 2022, the US Dollar was broadly stable from 2016 to 2022.

A final source of underperformance was our reliance on quality growth stocks (like those in the technology sector), over value stocks (such as oil companies and banks). This appeared a poor decision over 2022 where value stocks have significantly outperformed growth stocks. However, as our time horizon is the medium and longer term, we believe that growth companies are likely to be more resilient as we move through a recessionary environment in 2023. These companies have strong products with good price control (where prices can increase without reducing volumes) and are likely to deliver performance that is more stable over the medium to long-term.

Standardised performance of the Teachers with-profits fund for conventional with-profits policies

These figures show the investment return (before tax and charges) on the Teachers with-profits fund (for conventional with-profits policies) each calendar year for the last five years

Year Investment return % 
Year to 31 December 2022 -14.4%
Year to 31 December 2021  7.8%
Year to 31 December 2020  10.5%
Year to 31 December 2019  15.1%
Year to 31 December 2018  -3.3%

Year Investment return % 
Year to 31 December 2022 -14.4%
Year to 31 December 2021  7.8%
Year to 31 December 2020  10.5%
Year to 31 December 2019  15.1%
Year to 31 December 2018  -3.3%

Please remember that past performance doesn’t necessarily reflect what will happen in the future.

Responsible investing

Responsible investment encompasses all Environmental, Social and Governance (ESG) considerations.

ESG considerations are firmly embedded in the management of our investments as we believe we have an obligation to our members to invest their money responsibly. By doing so, we aim to achieve strong investment returns and contribute to the sustainable development of the world and society. 

The Investment Committee and With-Profits Committee regularly monitor a range of metrics to assess climate change risk. The funds typically outperformed the benchmark with lower carbon intensities and emissions whilst holding better ESG-rated assets.

2022 ESG Metrics Fund Benchmark 
Carbon Intensity 126 174
Carbon Emissions 72 139
CTI ESG Ratings 2.43 2.59
2022 ESG Metrics Fund Benchmark 
Carbon Intensity 126 174
Carbon Emissions 72 139
CTI ESG Ratings 2.43 2.59

Portfolio coverage (percent of portfolio represented by the data) ranges from 68% to 79%. In all cases the fund coverage is above the benchmark coverage.
Carbon Emissions and Carbon Intensity are calculated on a rolling 12 month basis. 

The metrics shown are as at end-2022 and are defined as:

Carbon Intensity is the tonnes CO2 emitted per $1m of sales. This is a company’s carbon emissions relative to the size of the business adjusted for the weighting in a portfolio or benchmark. Carbon intensity assessments provide an indication of carbon efficiency. This measure is agnostic to ownership share and facilitates comparison relative to other portfolios including non-equity asset classes.

Carbon Emissions is the tonnes CO2 emitted per $1m invested. This is a normalised measure of a portfolio’s contribution to climate change that enables comparisons with a benchmark, between multiple portfolios, and over time, regardless of portfolio size.

CTI ESG rating is our asset manager, Columbia Threadneedle Investment’s proprietary ESG rating system from 1 (very good ESG) to 5 (poor ESG).

Inherited estate fund performance review

This is a separate fund for with-profits policies originally provided by Teachers Assurance which includes the ‘inherited estate’ and allocations of special bonus.

This fund has a long-term investment strategy of investing in a mix of fixed-interest securities and cash.

For more information on the Teachers with-profits fund and separate inherited estate fund please see the guide ‘Your guide to how we manage the Teachers Assurance Fund for with-profits business'.

Standardised performance for the Teachers inherited estate fund

These figures show the investment return (before tax and charges) on the Teachers inherited estate fund each calendar year for the last five years

Year Investment return % 
Year to 31 December 2022 -12.0%
Year to 31 December 2021  -2.6%
Year to 31 December 2020  5.2%
Year to 31 December 2019  6.0%
Year to 31 December 2018  0.4%

Year Investment return % 
Year to 31 December 2022 -12.0%
Year to 31 December 2021  -2.6%
Year to 31 December 2020  5.2%
Year to 31 December 2019  6.0%
Year to 31 December 2018  0.4%

Please remember that past performance doesn’t necessarily reflect what will happen in the future.

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 £584bn of assets (as at 31 December 2022), 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.

Asset allocation

The types of asset that the Teachers with-profits funds and the inherited estate fund invest in can be seen on the with-profits asset allocation page.

Unit price history - Teachers unitised with-profits policies

Under each of the Teachers unitised with-profits policy types listed below are tables that show the unit prices at the end of each of the last five calendar years. Just click on the policy type to see the tables.

Unitised with-profits policies hold units in the two funds:

  • The Teachers with-profits fund - this provides the main benefits of Teachers with profits policies.
  • The Teachers inherited estate fund - where the inherited estate and allocations of special bonus are invested.

For more information on how Teachers unitised with-profits policies work please refer to:

Unit prices

Take a look at the latest published unit prices for these products.
Teachers Anniversary Bond
Regular Savings Plan
Guaranteed Savings Plan (Sold until August 2012)
Guaranteed Savings Plan (Sold from September 2012)
Tax Exempt Savings Plan
Tax Free Savings Plan (Sold January 2007 to August 2012)
Tax Free Savings Plan (Sold from September 2012)
Guaranteed Growth Bond – 10 year term, 10% Guarantee (Sold September 2012 to January 2014)
Guaranteed Growth Bond – 10 year term, 10% Guarantee (Sold from February 2014)
Guaranteed Growth Bond – 10 year term, 15% Guarantee (Sold from February 2014)
Guaranteed Growth Bond – 10 year term, 20% Guarantee (Sold from February 2014)
Guaranteed Growth Bond – 10 year term, 25% Guarantee (Sold from February 2014)
Guaranteed ISA
Guaranteed Growth ISA – 10 year term, 10% Guarantee (Sold September 2012 to January 2014)
Guaranteed Growth ISA – 10 year term, 10% Guarantee (Sold from February 2014)
Guaranteed Growth ISA – 10 year term, 15% Guarantee (Sold from February 2014)