Perspectives
Timely insights on global markets, macro trends and asset allocation to help financial advisers accurately shape multi-asset and MPS portfolio decisions
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When markets become uncertain, the research depth and operational resilience behind an MPS partner can make a meaningful difference
Scale designed to stand up in volatile markets
China’s growth engine faces fresh challenges
COLUMBIA THREADNEEDLE
Fixed income’s resurgence: Why wealth managers should rethink allocations
ABERDEEN
Welcome to the fixed income café where lunch can be free
Gilt market volatility isn’t all down to the ‘moron premium’
VANGUARD
QUILTER
Multi-asset and MPS in 2026
In an environment of market volatility, a resilient investment strategy hinges on active management and a consistent investment process
Managing active funds through financial market shocks
In a world where client expectations are evolving, we are adapting to give LifeStrategy investors more options
A new chapter for LifeStrategy: More choice, same principles
Behavioural science shows that emotions, mental shortcuts, and social influences often play a far greater role than spreadsheets or projections. Understanding them is essential to help clients make better long-term decisions
Mind over markets: the science behind investment decisions
Strength that aims to turn scale into long-term resilience
The power behind the portfolios
Portfolio manager Keith Balmer explains how the firm’s multi-asset investment approach is best suited to today’s current macro backdrop
Rewriting the multi‑asset playbook: Why optionality matters more than ever
Our new blended model portfolio service combines world-leading active management with Vanguard’s cost-effective index expertise
BlendedLife Dynamic MPS: The best of active and index investing
Unlike other countries, the UK does not have a strong investment culture. On average, the UK invests just 19% of their household financial assets compared to 56% in the US
Smoothing the journey
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Perspectives: Multi-asset and MPS in 2026
Important Information Past performance does not predict future returns. The value of investments, and the income from them, can go down as well as up and clients may get back less than the amount invested. The views expressed in this article should not be construed as advice or an investment recommendation on how to construct a portfolio or whether to buy, retain or sell a particular investment. The information is being given only to those persons who have received this document directly from Aberdeen Portfolio Solutions Limited and must not be acted or relied upon by persons receiving a copy of this document other than directly from Aberdeen. No part of this document may be copied or duplicated in any form or by any means or redistributed without the written consent of Aberdeen. The information contained herein including any expressions of opinion or forecast have been obtained from or is based upon sources believed by us to be reliable but is not guaranteed as to the accuracy or completeness. Any data contained herein which is attributed to a third party (“Third Party Data”) is the property of (a) third party supplier(s) (the “Owner”) and is licensed for use Aberdeen*. Third Party Data may not be copied or distributed. Third Party Data is provided “as is” and is not warranted to be accurate, complete or timely. To the extent permitted by applicable law, none of the Owner, Aberdeen* or any other third party (including any third party involved in providing and/or compiling Third Party Data) shall have any liability for Third Party Data or for any use made of Third Party Data. Neither the Owner nor any other third party sponsors, endorses or promotes the fund or product to which Third Party Data relates. Aberdeen means the relevant member of Aberdeen group, being Aberdeen plc together with its subsidiaries, subsidiary undertakings and associated companies (whether direct or indirect) from time to time. Aberdeen Portfolio Solutions Limited is registered in England (08948895) at 280 Bishopsgate, London EC2M 4AG and authorised and regulated by the Financial Conduct Authority.
“In a world where your clients expect clarity and regulators expect evidence, a large, structured investment environment can provide the governance infrastructure that supports this”
When markets become uncertain, the research depth and operational resilience behind an MPS partner can make a meaningful difference.
Why scale matters
Scale isn’t simply size. It’s the breadth of capability, the sophistication of the investment environment and the operational resilience behind the portfolios your clients rely on. Equally, it can also impact a firm’s ability to innovate and develop propositions. 1. Research depth that drives better-informed decisions When markets move quickly, evidence matters. A scalable research engine brings together specialists across asset classes, geographies and market themes. It continuously monitors macro, political and company-level developments, and interprets data in real time. This depth helps teams’ separate noise from material change and make decisions grounded in analysis rather than sentiment. For you, this translates into portfolios built on far more than headline market signals. It offers conviction that underlying decisions have been tested and challenged at multiple layers. 2. A repeatable, disciplined investment process offers consistency Scale supports a structured investment framework with defined roles, repeatable steps and documented oversight. This helps ensure: Decisions follow a consistent methodology Portfolios remain aligned to their intended risk profiles Asset allocation and fund selections are transparent and explainable Outcomes are monitored and reviewed with robust oversight In a world where your clients expect clarity and regulators expect evidence, a large, structured investment environment helps to provide the governance infrastructure that supports this. 3. Operational and financial resilience Financial strength is an often overlooked differentiator. However, it underpins everything from operational resilience to innovation. A stable, well-capitalised MPS provider can invest in innovating, evolve its proposition and stay focused on long-term delivery rather than short-term pressures. For you, this stability aims to reduce operational risk and help reassure your clients that their portfolios are supported by an organisation designed for the long-term.
How scale can enhance portfolio resilience
Market volatility is, by its very nature, unpredictable, resilience is not. MPS providers with real scale can build portfolios that are designed to navigate difficult conditions with discipline. Broader opportunity set: Larger teams with extended reach are able to identify opportunities across asset classes, geographies and investment styles, increasing diversification in a purposeful way. Ability to act with clarity: Scale can enable faster interpretation of complex data and quicker, evidence-based adjustments where needed, without losing sight of long-term goals. Advanced risk management: Greater resource allows for advanced modelling, scenario testing and oversight. This means that vulnerabilities can be identified early, monitored closely and managed proactively. These capabilities are designed to help portfolios hold their course through uncertainty, offering you clearer messaging for client conversations.
How we apply scale with our MPS
At Aberdeen, scale is more than numbers. It’s how we apply our global research depth, structured frameworks and long-term philosophy to support you and your clients. Global research capability: Our investment capabilities draw on broad global research teams covering equities, fixed income, alternatives and macro trends, providing continuous monitoring and layered insight. A disciplined investment framework: Strategic allocation, tactical insight and rigorous risk oversight work together to help maintain consistency across portfolios. Heritage and stability: Decades of active management experience and continued investment in capability aim to offer resilience through market cycles. These elements are designed to help you demonstrate strong governance, maintain client trust and deliver outcomes aligned to long-term objectives.
Sources 1. Source: Bloomberg. Data are monthly total returns in USD from 01 January 1990 to 30 April 2023. Global equities are represented by the MSCI ACWI Index. Global bonds are represented by the Bloomberg Global Aggregate Index Value (USD Hedged). An equity market downturn is defined as a decrease of more than 10% from the previous maximum.
Periods of heightened market volatility test more than portfolio construction. They test the strength of the relationships that you hold with your clients and the robustness of the planning. When conditions shift quickly, your clients expect reassurance that their investments are managed with discipline and supported by real depth. In these moments, the scale behind your MPS partner matters. Scale is often described as a hygiene factor, but it plays a crucial role in helping to deliver resilient investment management. Not all providers have the research capability, infrastructure or organisational depth required to navigate fast moving markets. Working under Consumer Duty, choosing an investment partner with meaningful scale can strengthen your ability to demonstrate robust governance, and transparency, and help to deliver consistent outcomes.
Learn more about Aberdeen's MPS Solutions
The scale advantage
Volatility magnifies the importance of choosing an MPS partner with genuine depth. Scale, applied with discipline and supported by strong infrastructure, offers a solid foundation for helping to deliver consistent outcomes. For you, partnering with an MPS provider that can evidence meaningful scale, such as Aberdeen, means partnering with a team that aims to stay steady, informed and focused on long-term objectives, even when markets aren’t.
Mark Hopcroft, Head of Investment Solutions, Aberdeen Adviser
CONTRIBUTOR
RETURN TO HOMEPAGE
“A strong investment organisation is designed to work through cycles, not chase moments. It aims to stay patient when needed, decisive when required and aligned with long-term objectives”
Strength that aims to turn scale into long-term resilience.
Darren Ripton, Head of MPS
Why strength matters
Strength helps to anchor an investment process through stress, keeps decision-making aligned with long-term philosophy, and provides the governance structure you need to help demonstrate Consumer Duty in practice. It also references the philosophy, DNA and the cultural position of your chosen partner – it’s one of the key reasons why you work with them. 1. Strength keeps philosophy consistent An investment philosophy is only useful if it stays intact through different conditions. Strength can keep teams anchored to long-term thinking, helping you to explain portfolio behaviour with clarity, particularly in stressed markets. A strong investment organisation is designed to work through cycles, not chase moments. It aims to stay patient when needed, decisive when required and aligned with long-term objectives. 2. Strength underpins governance Strong governance frameworks define who makes decision, how challenge works and how oversight functions are embedded. This offers transparency that you can reference when demonstrating Consumer Duty responsibilities around robustness, accountability and evidence. Strength can help to ensure: Decision-making is documented Roles and responsibilities are clearly defined Risk oversight is continuous and independent 3. Strength supports long-term resilience Financial strength allows an MPS provider to keep investing in capability: research, technology, risk systems, data and specialist expertise. It helps to ensure that teams remain focused on long‑term delivery rather than short‑term commercial pressures. For you, this aims to reduce uncertainty. Strong businesses are able to make decisions confidently, continue enhancing their proposition and stay aligned with future market needs.
How strength and scale work together
Scale provides the resource. Strength helps to ensure those resources are used consistently. When combined, you and your clients may benefit from portfolios that: Reflect a clear philosophy Maintain alignment to risk profiles Adjust with discipline rather than emotion Offer transparency backed by governance maturity Together, strength and scale offer an investment engine that aim to support you in better client conversations and offer clearer demonstration of good outcomes.
How this shows up in our investment process
At Aberdeen, strength and scale come together through our long-term disciplined approach. 1. Repeatable, transparent asset allocation We follow a structured approach to strategic and, where appropriate, tactical asset allocation. The framework is consistent and the rationale is clear. For you, this means portfolio positioning is explainable and aligned to risk profiles. 2. Research backed by global capability Scale gives our team access to specialists across equities, fixed income, alternatives and macroeconomics. Strength helps to ensure this depth is applied consistently across portfolios. Together, they create layered insights: multiple teams testing assumptions, challenging views and monitoring risks. It’s the sort of depth that’s hard to replicate without a long-established global investment footprint. 3. Governance and oversight designed for consistency Our governance structure includes independent oversight, challenge functions and defined decision-making roles. This aims to support your Consumer Duty responsibilities by offering a transparent framework behind every portfolio decision. 4. Long-term philosophy embedded into every decision Our process aims to prioritise long-term resilience over short-term reaction. It’s a philosophy shaped through multiple market cycles, and one that aims to remain consistent...and it’s embedded into our culture.
Market uncertainty often reinforces a simple truth: scale brings depth, but it’s strength that can turn depth into something dependable. Strength is more than financial stability. It is the combination of heritage, philosophy, governance and organisation discipline that helps to ensure investment processes hold their course through cycles. Here, we’ll look at how strength can help to transform scale into resilience and how it is this combination that can define the real value of an MPS partner.
What this means for you and your clients
Strength and scale aims to translate into: Diversification built with intention Proactive risk management Execution that is steady, not reactive Portfolios positioned to navigate uncertainty with discipline These characteristics aim to support you with clearer conversations, more consistent client experience and strong evidence of governance.
Putting Aberdeen’s investment engine to work
For many, outsourcing investment management is a strategic decision. The value lies not just in efficiency, but in bringing a sophisticated, well-resourced investment engine into the firm. Using Aberdeen’s MPS solutions offers you access to: Global research developed over decades A structured, challenge-driven investment framework A long-term philosophy that anchors decisions Governance and oversight aligned with Consumer Duty The financial strength to continue investing in capability through cycles This aims to free you up to focus on the work only you can do: planning, client conversations, suitability, and helping people make confident long-term decisions.
Strength that aims to support long-term outcomes
Strength and scale are not marketing phrases. They are practical advantages that aim to help you deliver consistency and clarity for your clients. When you choose an MPS partner, such as Aberdeen, you’re choosing the engine that powers their service. Choosing one with genuine strength and scale means choosing an engine designed for the long-term.
For use by professional clients and/or equivalent investor types in your jurisdiction (not to be used with or passed on to retail clients). This document is intended for informational purposes only and should not be considered representative of any particular investment. This should not be considered an offer or solicitation to buy or sell any securities or other financial instruments, or to provide investment advice or services. Investing involves risk including the risk of loss of principal. Your capital is at risk. Market risk may affect a single issuer, sector of the economy, industry or the market as a whole. The value of investments is not guaranteed, and therefore an investor may not get back the amount invested. International investing involves certain risks and volatility due to potential political, economic or currency fluctuations and different financial and accounting standards. The securities included herein are for illustrative purposes only, subject to change and should not be construed as a recommendation to buy or sell. Securities discussed may or may not prove profitable. The views expressed are as of the date given, may change as market or other conditions change and may differ from views expressed by other Columbia Threadneedle Investments (Columbia Threadneedle) associates or affiliates. Actual investments or investment decisions made by Columbia Threadneedle and its affiliates, whether for its own account or on behalf of clients, may not necessarily reflect the views expressed. This information is not intended to provide investment advice and does not take into consideration individual investor circumstances. Investment decisions should always be made based on an investor’s specific financial needs, objectives, goals, time horizon and risk tolerance. Asset classes described may not be suitable for all investors. Past performance does not guarantee future results, and no forecast should be considered a guarantee either. Information and opinions provided by third parties have been obtained from sources believed to be reliable, but accuracy and completeness cannot be guaranteed. This document and its contents have not been reviewed by any regulatory authority. Issued by Threadneedle Asset Management Limited, No. 573204 and/or Columbia Threadneedle Management Limited, No. 517895, both registered in England and Wales and authorised and regulated in the UK by the Financial Conduct Authority. Columbia Threadneedle Investments (Columbia Threadneedle) is the global brand name of the Columbia and Threadneedle group of companies. © 2026 Columbia Threadneedle. All rights reserved.
Find out more on CT Universal MAP Ranges Low-cost, active multi-asset options suitable for a range of financial planning scenarios.
“A strategic approach to asset allocation can generate an asset mix that helps deliver investment outcomes that are aligned with clients' longer-term goals, even through volatile periods”
In an environment of market volatility, a resilient investment strategy hinges on active management and a consistent investment process, says Eloise Robinson, Portfolio Manager, Multi-Asset Solutions, Columbia Threadneedle Investments.
Eloise Robinson, Portfolio Manager, Multi-Asset Solutions
How do you differentiate between market noise and genuine systemic crises?
In news flow driven markets it can be tempting to rapidly reposition portfolios to reflect events like US tariff announcements or conflict in the Middle East. However, given scope for policy reversals such an approach could quickly lead to being on the wrong side of trades. Our tactical asset allocation views are informed by 3 pillars: Fundamental: Including macro cycle (growth, inflation and interest rates), policy (central bank and policy maker stance), earnings / defaults. Valuation: Including fair value modelling, risk premia analysis, intra-market valuation analysis. Behavioural: For example, positioning, sentiment, flow. By considering these different aspects, we aim to look through market news and form a view on the macro backdrop and expected implications for markets, and hence tactically position the portfolios to either best take advantage of any associated opportunities or reduce exposure where we see specific risks.
As you see stress building, how do you adjust the portfolio? Are you rotating into specific sectors or asset classes?
Our more frequently reviewed tactical asset allocation is designed to add value by profiting from shorter-term opportunities and reducing exposure to specific risks through time. These views are then integrated into the portfolios in the most efficient manner, either by physical trades or through synthetic exposures. The tactical process involves inputs and discussion between asset class specialists, economists, and multi-asset experts. Inputs used include fundamental views and quantitative models. In addition, we implement risk mitigation trades on a more infrequent basis, which will typically take one of three forms: Changing the profile of the exposure: Occasionally, exposure can be amended through options which allows the fund to maintain the upside potential whilst reducing the potential downside. Diversifying: Adding exposure to asset classes that will likely perform well during the ‘risk' event. For example, government bonds when equity markets sell off. Reduction in exposure: Simply by selling down some or all of the exposure related to a specific risk.
Crises create opportunities: Can you provide an example of a position you initiated during a recent period of market panic? What was the thinking behind it and how did it play out?
After the announcement of higher than anticipated US tariffs on ‘Liberation Day', markets began to rapidly price in a growing likelihood of recession, with credit spreads, notably in High Yield, widening as a result. With respect to High Yield in particular, our view at the time was one of continuing solid fundamentals and with that in mind, we felt that the levels of spreads reached were unjustified, hence we took the opportunity to initiate a tactical long in High Yield. Post that trade, spreads tightened significantly and we were able to lock in profits a few months later.
With recent events in mind and thinking back over previous times of uncertainty like the pandemic, the 2022 rate-hike cycle, or even the GFC, did you follow a consistent framework or does each unique crisis require a different approach?
A strategic approach to asset allocation can generate an asset mix that helps deliver investment outcomes that are aligned with clients' longer-term goals, even through volatile periods. This can be enhanced through an actively managed tactical approach taking advantage of shorter-term themes and opportunities, as well as helping to better preserve capital in more challenging periods. Whilst the drivers behind significant market events may vary, our investment process is consistent. A rapidly evolving event may necessitate more frequent tactical discussions however, to ensure we are incorporating pertinent new information. There is clearly a balance to be struck however, between adjusting our tactical positions when we believe the fundamental picture has changed, versus trading on short term news flow which we look to avoid.
Market shocks often reignite the active versus passive debate. What is the argument for active management during periods of extreme volatility?
Whilst active and passive can have a role to play, we believe active management can help navigate uncertainty in volatile periods by offering the following: Preserving capital: The adjustment of allocations between and within different asset types, as well as across regions, can mitigate some of the impact of challenging markets. Scope for outperformance: We favour investments with outperformance potential by virtue of their valuation and fundamental prospects, while looking to avoid those that look expensive or vulnerable. Within a passive strategy, you do not have this choice. Harnessing volatility: Volatile markets can cause shorter term investment valuations to fluctuate, sometimes sharply. For an active manager, like ourselves, these sorts of moves can provide opportunities to add value. Concentration risk: The combination of strategic asset allocation, active security selection and a global remit results in diversified portfolios which can reduce concentration risk.
“We have multiple levers we can utilise to position for both opportunities and risks”
Outline your fund's core investment philosophy. How is it designed to be resilient and to find opportunity during market shocks?
The Universal Range aims to deliver a suite of cost-effective, risk-managed solutions, through well-diversified global portfolios of equities and fixed income. We believe that active asset allocation is one of the key drivers of returns and the portfolios are diversified across asset classes, timeframes, geographies and investment styles. Active management takes place across three levels: strategic asset allocation on a quarterly basis, security selection employing in-house investment teams' expertise, and fortnightly tactical asset allocation. We have multiple levers we can utilise to position for both opportunities and risks: Asset allocation: The split between equities and fixed income reflects longer-term strategic considerations, alongside more tactical adjustments to account for prevailing conditions. Security selection: Specialist teams search out the best available opportunities. Attractive valuation, proven management and appropriate consideration of ESG factors are among the characteristics we favour. Geographic exposure: We invest across a range of markets and adjust weighting based on where we see value and opportunities or are concerned about risks. Managing risk: We can address risks such as currency fluctuations, government policy and central bank actions using a range of active techniques.
CONTRIBUTORS
“When things change in markets, you've got to be able to understand is it time to stick or twist?”
Keith Balmer, portfolio manager at Columbia Threadneedle Investments, explains how the firm’s multi-asset investment approach is best suited to today’s current macro backdrop.
Keith Balmer, Portfolio Manager
A new world order
Keith Balmer is a portfolio manager at Columbia Threadneedle Investments and part of the team that oversees the group’s CT Universal MAP, or Universal MAP range. The products have over £5 billion in assets and are growing strongly. Balmer says the Universal MAP range is designed to be nimble, given the environment it launched into was drastically changing. “If you set your asset allocation back in 2010, post the global financial crisis, it didn't make too much difference [where you invested] as most assets offered a good level of return. However, we started the Universal range in 2017 with a view to invest actively in markets,” recalls Balmer. “The markets experienced since then have proved this to be a good decision." This is a reflection of the fact that accommodative monetary policy had for years been supporting markets with quantitative easing, which was beneficial across many different asset classes. Over time, investors began to better understand the long-term effects of this, with the COVID-19 pandemic and heightened inflation then complicating things. While Balmer says a “simple” strategy would have worked before, the greater choice a multi-asset portfolio affords is now warranted. “When things change in markets, you've got to be able to understand is it time to stick or twist?” asked Balmer. “It's about having more optionality. A lot of funds you see out there are, I would suggest, investing with one hand tied behind their back because they've ruled out, either stock selection or active asset allocation, limiting their optionality.”
MAP reading
This is evident in how the MAP range is designed, across six risk-rated portfolios and five within its sustainable version. The investment decisions behind MAP are broken down in three parts according to Balmer. First a strategic asset allocation is decided upon, reviewed on a quarterly basis. This itself involves a two-step process with both quantitative and qualitative analysis. “The upside of using a quantitative model is that complex optimisation problems are calculated quickly and repeatably, the downside with models is they've never seen a pandemic or a Trump and so could make naïve investment decisions,” says Balmer. “As part of our team’s processes, we have a discussion to understand exactly why the model is changing its view. We can see the inputs so we can understand why, and sometimes amend the output accordingly.” The second stage that follows is security selection, where the MAP team turns to the wider Columbia Threadneedle firm to find investments that chime with the decided asset allocation mix. Here, Balmer says a bottom up selection can, and has been, a “very profitable source of excess return”. The third and final stage – tactical asset allocation – allows the portfolio to be responsive to rapid changes in markets. “We have a formalised process with two preliminary meetings, one to determine key macro trends and the second to determine relative cheapness of markets and then we have the asset allocation meeting which will determine what we should be doing across all of our portfolios in the multi-asset stable,” explains Balmer. “fast-moving, much more directed in terms of themes, regional and factor exposure or credit quality, versus the strategic asset allocation process which is more broad-based.” However, despite the reactive ability it affords Balmer and his team, the Universal funds are not without constraints. For example the ‘adventurous’ portfolio cannot hold 80% in cash, while ‘balanced’ has a 60% equity allocation limit. This ensures that each fund is well diversified whilst remaining at its appropriate risk rating.
Navigating an uncertain future
Looking ahead, Balmer concedes that like all investors, it’s impossible to know what will happen next. Instead, he and his team rely on “cool heads” but argues it’s a “no brainer” to be able to change positions accordingly. “I don't understand why you wouldn't want to change your portfolio according to where you are in the economic cycle,” says Balmer. “We all understand in a recession, equities are going to do terribly and high quality fixed income markets are going to do well - and when you're coming out of recession into a healthier economy, then equities are going to do well and outperform fixed income so why would you keep your portfolio allocations the same through these different market conditions?” Balmer says this uncertainty – and the concern it can inspire among investors – is why the Universal process is so important, especially its initial focus on strategic asset allocation powered by quantitative data analysis. “By taking a completely unbiased view of the world, it gives us a starting point which is repeatable through time,” adds Balmer. “The model we've built, and continue to enhance, can easily be back tested, whilst the qualitative overview ensures investment decisions are sensible.”
Multi-asset investments are nothing new, but the backdrop in which they operate is changing drastically. Macroeconomic upheaval and different relationships between how various asset classes behave are requiring investors to different outlooks, signifying a departure from static strategies.
IMPORTANT: The projections or other information generated by the Vanguard Capital Markets Model® regarding the likelihood of various investment outcomes are hypothetical in nature, do not reflect actual investment results, and are not guarantees of future results. VCMM results will vary with each use and over time. The VCMM projections are based on a statistical analysis of historical data. Future returns may behave differently from the historical patterns captured in the VCMM. More important, the VCMM may be underestimating extreme negative scenarios unobserved in the historical period on which the model estimation is based. The Vanguard Capital Markets Model® is a proprietary financial simulation tool developed and maintained by Vanguard’s primary investment research and advice teams. The model forecasts distributions of future returns for a wide array of broad asset classes. Those asset classes include US and international equity markets, several maturities of the US Treasury and corporate fixed income markets, international fixed income markets, US money markets, commodities, and certain alternative investment strategies. The theoretical and empirical foundation for the Vanguard Capital Markets Model is that the returns of various asset classes reflect the compensation investors require for bearing different types of systematic risk (beta). At the core of the model are estimates of the dynamic statistical relationship between risk factors and asset returns, obtained from statistical analysis based on available monthly financial and economic data from as early as 1960. Using a system of estimated equations, the model then applies a Monte Carlo simulation method to project the estimated interrelationships among risk factors and asset classes as well as uncertainty and randomness over time. The model generates a large set of simulated outcomes for each asset class over several time horizons. Forecasts are obtained by computing measures of central tendency in these simulations. Results produced by the tool will vary with each use and over time. The primary value of the VCMM is in its application to analysing potential client portfolios. VCMM asset-class forecasts—comprising distributions of expected returns, volatilities, and correlations—are key to the evaluation of potential downside risks, various risk–return trade-offs, and the diversification benefits of various asset classes. Although central tendencies are generated in any return distribution, Vanguard stresses that focusing on the full range of potential outcomes for the assets considered, such as the data presented in this paper, is the most effective way to use VCMM output. The VCMM seeks to represent the uncertainty in the forecast by generating a wide range of potential outcomes. It is important to recognise that the VCMM does not impose “normality” on the return distributions, but rather is influenced by the so-called fat tails and skewness in the empirical distribution of modelled asset-class returns. Within the range of outcomes, individual experiences can be quite different, underscoring the varied nature of potential future paths. Indeed, this is a key reason why we approach asset-return outlooks in a distributional framework. Investment risk information The value of investments, and the income from them, may fall or rise and investors may get back less than they invested. Past performance is not a reliable indicator of future results. The performance data does not take account of the commissions and costs incurred in the issue and redemption of shares. Any projections should be regarded as hypothetical in nature and do not reflect or guarantee future results. Important information This is directed at professional investors and should not be distributed to, or relied upon by retail investors. This is designed for use by, and is directed only at persons resident in the UK. The information contained herein is not to be regarded as an offer to buy or sell or the solicitation of any offer to buy or sell securities in any jurisdiction where such an offer or solicitation is against the law, or to anyone to whom it is unlawful to make such an offer or solicitation, or if the person making the offer or solicitation is not qualified to do so. The information does not constitute legal, tax, or investment advice. You must not, therefore, rely on it when making any investment decisions. The information contained herein is for educational purposes only and is not a recommendation or solicitation to buy or sell investments. Issued by Vanguard Asset Management Limited, which is authorised and regulated in the UK by the Financial Conduct Authority. © 2025 Vanguard Asset Management Limited. All rights reserved.
For more information about how the Quilter Smoothed Funds could give your clients the confidence to stay invested and enjoy a more sustainable income in retirement, please visit quilter.com/smoothed-funds, or get in touch with your usual Quilter contact.
“Even when clients do invest, they are not operating in a neutral environment. Negativity bias means losses feel around twice as painful as gains feel pleasurable”
Investment decisions are rarely driven by logic alone. Behavioural science shows that emotions, mental shortcuts, and social influences often play a far greater role than spreadsheets or projections. Understanding these behavioural forces is essential to helping your clients make better long-term decisions.
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At the centre of this is cognitive dissonance. This is the discomfort created when two conflicting beliefs exist at the same time. To ease that discomfort, people often change their behaviour, not in the most rational way, but in the way that feels emotionally easiest.
Fear versus necessity
The decision to invest at all is often shaped by two competing ideas. On one side sits the rational understanding that investing is necessary to protect wealth against inflation. On the other sits a very human fear of market falls and losing money. When these ideas clash, many people default to inaction. Not investing becomes the easiest way to resolve the tension. Negative market headlines then help justify that decision: ‘I’m glad I stayed out – look what happened’. This is reinforced by social norms. In the UK, fewer than a quarter of people invest outside their pension. Holding cash feels safe because it is common, even though large sums are slowly losing value in real terms. People follow the crowd, assuming that if everyone else is doing it, it must be the right thing to do.
Negativity bias and the news cycle
Even when clients do invest, they are not operating in a neutral environment. Negativity bias means losses feel around twice as painful as gains feel pleasurable. As a result, negative information grabs attention and provokes stronger emotional reactions. Media coverage amplifies this bias. Headlines frequently focus on money being ‘wiped off’ stock markets, even during periods when markets rise overall. Over time, this creates a distorted perception of risk, increasing anxiety, and reinforcing pessimistic behaviour.
Framing matters more than we think
How investment decisions are framed can also influence outcomes. Regulated investment advice requires multiple warnings about areas like risk and past performance. Meanwhile, holding cash in an account returning less than inflation (which many do) carries no equivalent warnings, despite representing ongoing, real harm. This imbalance can unintentionally push clients towards decisions that feel safer but are worse in the long run.
“The desire for certainty can lead many to hold a substantial ’cash buffer’, - but holding too much cash increases inflation risk and longevity risk”
Can I take your order?
Have you ever been to McDonalds and ordered a diet coke with your meal? If you did, you are not alone, about a third of people will choose a diet coke over a regular coke. This is an example of cognitive dissonance. Rationally, the impact is marginal. Emotionally, however, it allows people to tell themselves a reassuring story: ‘at least I made a healthier choice’. The behaviour hasn’t changed, but the discomfort has eased. The same pattern appears repeatedly in investing.
The cost of constant monitoring
Meanwhile, our 24/7 world and the availability of digital platforms make it easier than ever for clients to frequently monitor investments. While access and transparency have benefits, daily checking can increase anxiety and lead to myopic loss aversion – a focus on short‑term losses at the expense of long‑term outcomes. Markets fall on a significant number of days, and because losses feel so uncomfortable, clients can develop a strong urge to act, often selling at precisely the wrong time. Behaviour, not market fundamentals, becomes the driver of poorer outcomes.
Decumulation and emotional risk
If we look at investing in retirement, cognitive dissonance does not disappear, it intensifies. Your clients need income, but fear risk. The desire for certainty can lead many to hold a substantial ’cash buffer’ ,- but holding too much cash increases inflation risk and longevity risk. This decumulation dilemma can lead to overly cautious decisions that feel reassuring in the short term but increase the risk of running out of money later.
Your real value
Ultimately, financial advice is as much about managing behaviour as managing portfolios. You play a critical role in helping your clients navigate cognitive dissonance, negativity bias, and herd behaviour through education, planning, cashflow modelling, and ongoing reviews. For some investors, solutions that reduce day‑to‑day volatility and emotional noise can support this process, making it easier to stay invested and focused on long‑term outcomes.
A smoother journey
Whether your clients are approaching retirement or already enjoying it, the Quilter Smoothed Funds have been built to give them a more reliable and reassuring way to invest. Built in partnership with Standard Life, the Quilter Smoothed Funds are designed to deliver a more stable investment experience to your clients by reducing the size of the day-to-day fluctuations to their fund value. By using a rolling-average smoothing process that is straightforward and easily explained, the Quilter Smoothed Funds can offer you and your clients a simpler, steadier, and smoother way to invest.
The value of your investments can fall as well as rise. Your clients may get back less than they invested. The back-testing example above refers to simulated past performance. Past performance is not a reliable indicator of future performance.
The Quilter Smoothed Funds, in partnership with Standard Life, could give your clients the confidence to stay invested and enjoy a more sustainable income in retirement. For more information, please visit quilter.com/smoothed-funds, or get in touch with your usual Quilter contact.
“You never see a headline that says ‘x billion wiped on markets’. Radio programmes talk about markets being spooked – people don't want to be spooked”
Past performance is not a reliable indicator of future results. The performance of an index is not an exact representation of any particular investment, as you cannot invest directly in an index. Source: Vanguard calculations, based on MSCI indices and historical equity data from Bloomberg, as at 31 December 2024. Performance calculated in GBP with gross income reinvested. Notes: Charts show the final balance of a hypothetical £100 investment in the relevant MSCI indices and individual equities denominated in GBP for the 10 years ended 31 December 2024.
You can always find an asset that will outperform your portfolio
Unlike other countries, the UK does not have a strong investment culture. On average, the UK invests just 19% of their household financial assets compared to 56% in the US.
Andy Miller, Lead Investment Director, Quilter
Andy Miller, Lead Investment Director at Quilter, sat down with behavioural economist, Mark Pittacio, and Andy Brown, Head of Fund Solutions at Standard Life, to discuss the behavioural elements of why people don’t invest and how the Quilter Smoothed Funds could be helpful for those clients.
Why do you think that is?
Mark: ‘Environments make a huge difference about whether people are interested in investing or not. ‘There's very much this view that when everything is going well, and when stock markets are flying, everyone becomes a risk taker. When the world's going to hell in a handcart, they suddenly become risk avoiders. But that is very much for people who are already invested. They've already probably got some experience of it. ‘For people who haven't invested at all, their environment is constantly of negativity because the news will use phrases like ‘x billion wiped off markets’. You never see a headline that says ‘x billion wiped on markets’. Radio programmes talk about markets being spooked – people don't want to be spooked. ‘So, generally speaking, people's understanding is one of negativity.’
How can the Quilter Smoothed Funds help?
Andy Brown: I think there’s a real place for smoothed funds to help with this. Retirement isn't a mathematical problem. Retirement is a personal problem. It's a people problem. It's something that you have to feel deeply about. So, how can you create friction around someone reacting to an event, and taking the wrong action? ‘The reason that people treat deposit funds as an investment is because of the predictability of return. When you invest in markets, it's not like that. ‘The Quilter Smoothed Funds use a rolling-average smoothing process. Because it's looking backwards at the returns that have been produced, and it's taking the average, it’s effectively giving someone the ability to ride through the future downswing in markets. ‘So, if the markets do drop by five percent, you're not going to immediately see that in your fund. So, it's a great way of taking what you have and solidifying in your mind that it’s ok.’
One feature of a smoothed fund is that if markets rise sharply, it will lag. Does that create psychological drawbacks?
Mark: ’Well, again, it depends on education really. But I would say it could bring benefits for the right clients. ‘People feel losses twice as much as we appreciate gains. So, a smoothed fund investor is just going to be comfortable with the fact that the fund is still rising. And that's probably more important than feeling that pain of loss.’
The stats show the UK is a nation of savers rather than investors. What’s driving that?
Mark Pittaccio: ‘Well, those people don't realise they're getting poorer. It's as simple as that. We all work in financial services, so we understand inflation, we understand returns. The average person in the street doesn't speak that way. So, quite often, this isn't a decision they even arrive at. ‘As a behavioural scientist, I'm one of those people that asks random strangers weird questions on the tube. Before we sat down today, I was asking people, ‘do you invest?’ and a lot of them said ‘yes’. I then asked, ‘where do you invest?’ and they mentioned a deposit account. So, they weren't invested, but they still regarded their deposit account as an investment. ‘Then I asked other people the same question and they said ‘no’. So, I asked if they have a pension and they said, ‘oh, yes, but it's delivered by my employer’. So, they don't regard themselves as investors. The concept of investing just isn't there.’
The Quilter Smoothed Funds have been designed to offer a more predictable and reliable income – that's clearly a valuable feature. Can you elaborate on that?
Andy: ‘We've talked a little bit about the rolling-average smoothing process and the benefits that delivers in terms of emotional predictability. However, there's always the risk of the ‘big thing’ happening, which causes a downward price adjustment. A unique feature of the Quilter Smoothed Funds is that regular withdrawals of up to 7.5% each year will not be subject to any downward price adjustments. ‘For clarity, we back tested the funds in the worst-case scenarios since July 2019, and a unit price adjustment wouldn't have happened, but this regular withdrawal allowance is there as an ‘insurance policy’ that maintains the level of income your client is taking. ‘That can mean the difference between your client thinking, ‘how to fund the £500 I need to spend on my grandkids’ birthdays this month?’ to ‘what am I going to buy my grandkids for their birthday this month?’.
Mark Pittacio, Behavioural economist
Andy Brown, Head of Fund Solutions, Standard Life
Investment risk information The value of investments, and the income from them, may fall or rise and investors may get back less than they invested. Some funds invest in emerging markets which can be more volatile than more established markets. As a result the value of your investment may rise or fall. Investments in smaller companies may be more volatile than investments in well-established blue chip companies. The Vanguard LifeStrategy® Funds may invest in Exchange Traded Fund (ETF) shares. ETF shares can be bought or sold only through a broker. Investing in ETFs entails stockbroker commission and a bid- offer spread which should be considered fully before investing. Funds investing in fixed interest securities carry the risk of default on repayment and erosion of the capital value of your investment and the level of income may fluctuate. Movements in interest rates are likely to affect the capital value of fixed interest securities. Corporate bonds may provide higher yields but as such may carry greater credit risk increasing the risk of default on repayment and erosion of the capital value of your investment. The level of income may fluctuate and movements in interest rates are likely to affect the capital value of bonds. The Funds may use derivatives in order to reduce risk or cost and/or generate extra income or growth. The use of derivatives could increase or reduce exposure to underlying assets and result in greater fluctuations of the Fund's net asset value. A derivative is a financial contract whose value is based on the value of a financial asset (such as a share, bond, or currency) or a market index. Some funds invest in securities which are denominated in different currencies. Movements in currency exchange rates can affect the return of investments. For further information on the model portfolio(s) risks please see the Understanding the Risks: Vanguard LifeStrategy model portfolio solutions document as well as the “Risk Factors” section of the prospectus of the underlying funds on our website. Important information This is directed at professional investors and should not be distributed to, or relied upon by retail investors. For further information on the investment policies and risks of the model portfolio(s), please refer to the prospectus and KIID of the underlying funds before making any final investment decisions. The KIID for each fund is available, alongside the prospectus, which is available in English only, via Vanguard’s website. For further information on the fund's investment policies and risks, please refer to the prospectus of the NURS and to the KII before making any final investment decisions. The KII for this fund is available, alongside the prospectus via Vanguard’s website. This is designed for use by, and is directed only at persons resident in the UK. The information contained herein is not to be regarded as an offer to buy or sell or the solicitation of any offer to buy or sell securities in any jurisdiction where such an offer or solicitation is against the law, or to anyone to whom it is unlawful to make such an offer or solicitation, or if the person making the offer or solicitation is not qualified to do so. The information is general in nature and does not constitute legal, tax, or investment advice. Potential investors are urged to consult their professional advisers on the implications of making an investment in, holding or disposing of shares and /or units of, and the receipt of distribution from any investment. The Authorised Corporate Director for Vanguard LifeStrategy Funds ICVC is Vanguard Investments UK, Limited. Vanguard Asset Management, Limited is a distributor of Vanguard LifeStrategy Funds ICVC. For investors in UK domiciled funds, a summary of investor rights can be obtained here. Issued by Vanguard Asset Management Limited, which is authorised and regulated in the UK by the Financial Conduct Authority. © 2026 Vanguard Asset Management Limited. All rights reserved.
LifeStrategy® funds and model portfolios A simple and low-cost way to achieve a high level of diversification, giving advisers more time back to focus on building stronger relationships with clients. Find out more
“This enhancement to LifeStrategy® underscores Vanguard’s commitment to delivering greater value to investors and responding to feedback from advisers with meaningful action”
In a world where client expectations are evolving, we are adapting to give LifeStrategy investors more options.
Gillian Hepburn, Head of UK Adviser Solutions, Vanguard
As clients’ needs and expectations continue to evolve, we’re pleased to announce the beginning of an exciting new chapter for UK investors with a significant evolution of our popular LifeStrategy® offering. For over 15 years, LifeStrategy® has been a cornerstone of many UK investors’ portfolios, and a benchmark for simplicity and accessibility. Now, we’re building on this foundation by reducing fees and broadening choice. These enhancements to LifeStrategy® underscore Vanguard’s commitment to delivering greater value to investors and responding to feedback from advisers with meaningful action. At the same time, it expands flexibility for you and your clients while preserving the qualities that investors rely on: simplicity, transparency, and a deliberate focus on long-term success.
A drive to act on feedback
Guided by Vanguard’s long-held belief in the importance of diversification—and reflecting the growing confidence of UK investors in global markets—the asset allocation of LifeStrategy® has steadily evolved over time to have a more global focus. From March through to June this year, in response to adviser feedback for broader global exposure, we’re taking steps to further reduce the UK exposure of the LifeStrategy® fund range and LifeStrategy® Classic Model Portfolio range. These changes will allow investors to benefit from greater diversification through global equities and bonds, while still maintaining a meaningful allocation to their home market.
An ongoing effort to expand choice
Furthermore, we are launching the LifeStrategy® Global fund range as a direct response to adviser feedback. Advisers also told us they wanted solutions that offer the option to fully reflect global markets—without the traditional UK home bias—and we’ve listened. By introducing the LifeStrategy Global fund range, we’re giving advisers and their clients the flexibility to select the approach that best fits their needs. Whether their preference is for the original LifeStrategy® funds with a meaningful UK allocation, or for a globally aligned portfolio, the decision is theirs. When it comes to tax efficiency, for example, a multi-asset fund can offer advantages over a MPS. Now, advisers have the freedom to choose the LifeStrategy® option with the approach that best meets their clients’ needs. We understand that investors have different needs and objectives. Our mission is to help all investors generate long-term returns and achieve their financial goals. We do this by listening and delivering choice. Our investment philosophy and process remain consistent—and now we offer access to Vanguard’s investment expertise through a wider range of multi-asset solutions, and at lower cost—to deliver even more value to UK investors.
Sources 1 The Ongoing Charges Figure (OCF) captures management and service costs, including administrative, audit, custodial, legal, registration, and regulatory costs, incurred by the fund. 2 The Vanguard Inc. (VGI) is owned by Vanguard’s US-domiciled mutual funds and ETFs. While VGI’s ownership structure can’t be replicated outside of the US (due to regulatory restrictions), this structure aligns Vanguard’s interests with those of our investors globally. 3 Up to and including the current LifeStrategy® fee reductions. Source. Vanguard, as at 22 January 2026. 4 Source: Broadridge, January 2025. All funds & ETFs, domiciled in France, Germany, Ireland, Italy, Luxembourg, the Netherlands, Switzerland, Spain and the UK. Funds of funds excluded; money market included. Calculations based on weighted assets and only on available TER data (2001 – 2025).
A commitment to lower costs
Since it was founded in the US in 1975, Vanguard has remained steadfast in its purpose to help financial advisers drive optimal client and business outcomes by offering low-cost, high-quality funds and ETFs. In the UK, we have championed low-cost investing through our LifeStrategy® funds and model portfolio services (MPS). Now we are reinforcing our commitment to lowering costs by reducing the OCF1 of our LifeStrategy® funds, with changes to our model portfolio pricing to follow later in the year. We’re able to do this because of Vanguard’s distinctive structure and client-focused philosophy. Similar to a building society, profits go back into the business. Our investor-owned structure2 and scale allow us to consistently reduce fees globally. In the UK and Europe more broadly, we’ve delivered more than 90 fee reductions across our funds and ETFs since 20093. And following our entry into the UK and other European markets, we have also seen significant fee reductions by other asset managers to stay competitive as local firms are forced to respond to our low expense ratios – known as “The Vanguard Effect”4.
This is a marketing communication. Investment risk information This is directed at professional investors and should not be distributed to, or relied upon by retail investors. The value of investments, and the income from them, may fall or rise and investors may get back less than they invested. For further information on the model portfolio(s) risks please see the Understanding the Risks: Vanguard BlendedLife model portfolio solutions document as well as the “Risk Factors” section of the prospectus of the underlying funds on our website. For third-party funds, please visit the respective provider’s website. Important information This is designed for use by, and is directed only at persons resident in the UK. The information contained herein is not to be regarded as an offer to buy or sell or the solicitation of any offer to buy or sell securities in any jurisdiction where such an offer or solicitation is against the law, or to anyone to whom it is unlawful to make such an offer or solicitation, or if the person making the offer or solicitation is not qualified to do so. The information does not constitute legal, tax, or investment advice. You must not, therefore, rely on it when making any investment decisions. Issued by Vanguard Asset Management, Limited which is authorised and regulated in the UK by the Financial Conduct Authority. © 2026 Vanguard Asset Management, Limited. All rights reserved.
Discover how BlendedLife Dynamic MPS and our broader range of multi-asset and MPS solutions can help advisers deliver consistent, outcome-focused solutions at scale for their clients.
“By harnessing a world-class investment proposition in a range of blended portfolios to suit varying client needs, BlendedLife Dynamic MPS can help free up time for the adviser to focus on what they do best”
Our new blended model portfolio service combines world-leading active management with Vanguard’s cost-effective index expertise.
As UK advisers continue to scale and streamline their businesses, demand for low-cost model portfolio services has grown rapidly. Many advisers are now integrating both active and index approaches within their centralised investment propositions, making blended model portfolio solutions an increasingly trusted option to help deliver great client outcomes. Against this backdrop, and as part of our ongoing commitment to help advisers better serve their clients, we are expanding our model portfolio offering with the launch of the Vanguard BlendedLife Dynamic MPS. This new range of five model portfolios is designed for those with a preference for a blended solution. By harnessing a world-class investment proposition in a range of blended portfolios to suit varying client needs, BlendedLife Dynamic MPS can help free up time for the adviser to focus on what they do best - holistic financial planning, behavioural coaching and deepening client relationships.
A dynamic approach to asset allocation
The range is grounded in a disciplined strategic asset allocation (SAA) framework. Wellington sets the long-term SAA for each portfolio and, within this, applies dynamic allocation tilts, allowing Wellington to take advantage of market opportunities. Because of this, BlendedLife Dynamic MPS is ideal for clients who prefer a more dynamic approach to asset allocation. Vanguard complements Wellington’s allocation insights by providing its index fund management excellence, portfolio oversight and disciplined active-manager selection approach. This partnership results in a range of blended portfolios that are diversified, cost-effective and built to meet different client preferences.
Supporting advisers and their clients
BlendedLife Dynamic MPS builds on Vanguard’s multi-asset expertise to address the growing demand for blended solutions. As the advice market evolves, these portfolios can help advisers to: Scale efficiently with centralised, professionally managed portfolios. Lower the cost of investing as part of delivering great client outcomes. Spend more time with clients, focusing on planning and relationship building. By blending the combined strengths of Vanguard and Wellington, the BlendedLife Dynamic MPS allows advisers and their clients to harness the best of active and index management at low cost.
Blending active management insight with low-cost index expertise
BlendedLife Dynamic MPS offers advisers diversified portfolios to support a wide range of client needs and is among the lowest-cost blended investment solutions available in the UK. Each of the five portfolios combines active and index funds, spanning a choice of equity allocations of 20%, 40%, 60%, 80% and 100%, allowing advisers to match more closely the risk and return preferences of each client. We have partnered with Wellington Management Company, one of the world’s leading asset managers, to develop this new range. Vanguard and Wellington’s relationship goes back more than 50 years, and this new offering extends that long-standing connection into the model portfolio service market for the first time. The BlendedLife Dynamic MPS draws on Wellington’s deep research and multi-asset heritage, combining Wellington’s portfolio construction expertise with Vanguard’s proven indexing and manager selection capabilities, commitment to low costs and robust governance.
