Adjustments to the Lifecycles at the end of 2024
BeFrank invests your employees’ pension contributions in Lifecycles. We offer Passive, Active and Sustainable Lifecycles, closely monitoring developments and results. All three lifecycles achieved excellent results this year. Nevertheless, at the end of November, the return mix fund of the Active Lifecycle lagged approximately 5% behind the return mix fund of the Passive Lifecycle. As we expect it to remain difficult to beat the market for the time being, we are making an adjustment to the Active Lifecycle.
Detailed information about the lifecycles and the results can be found at the bottom of this article.
What do we see in the market?
2024 has been a dynamic year in the financial markets. As mentioned above, each of the lifecycle strategies achieved good results. However, the growth in the stock markets is increasingly being supported by a limited number of companies. Among other things, Trump’s election win has pushed some tech stocks higher on the stock market. As a result, diversification within equity investments is becoming increasingly important.
The performance of various companies differs considerably from each other. This makes it difficult for many active fund managers to beat the market. This also applies to the strategy for developed markets equities within our Active Lifecycle. For more information about lifecycles, check the picture at the bottom of this page.
Slightly more passive strategy
We want to limit the deviation from the benchmark for the Active Lifecycle. We do this by temporarily replacing 33% of the sustainable equity strategy from the ‘First Class Return Fund’ with the ‘Northern Trust World Custom ESG Index Fund’ from the ‘First Class Return Index Fund’, which is now also used within the Passive Lifecycle. In this way, we can react appropriately in the short term to underperformance of returns in a market where active strategies are currently struggling. If we look at the returns of the mixed funds over the past five years, we see that the Active Lifecycle fund has similar returns after costs as the fund in the Passive Lifecycle.
What other adjustments do we make?
In December, we also adjusted the investment mix of the Active and Passive Lifecycles: we will invest slightly more in developed market equities (from 65% to 67.5%) and slightly less in emerging market equities (from 15% to 12.5%). We are doing this because economic, political and social developments in emerging markets have become less favourable. And that is why we are downgrading the weight of emerging market equities. We did not make any adjustments to the Sustainable Lifecycle.
Looking ahead to 2025
As always, we continue to closely monitor the markets and the results of our lifecycles. Active investment continues to be the objective for the Active Lifecycle, but we may take more steps in 2025 to further limit risks. If this is the case, we will keep you informed. Of course, this also applies in the event that we return to fully active management or if adjustments in other lifecycles are required. For all lifecycles, the ultimate goal is to achieve a good pension result.
More information on Lifecycles
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