Return on Investments 2020 LifeSight funds
At LifeSight you accrue pension by means of investing. Your pension payment is therefore dependent on the return on your pension capital. Via this message we inform you on investing at LifeSight and what the return has been on the LifeSight funds over the year 2020.
Market developments in 2020
The year 2020 was an eventful year in multiple ways. The Covid-19 pandemic was dominating the news and caused a lot of human suffering and an unprecedented reduction of the worldwide economy. Governments and Central Banks tried to reduce the negative financial impact of the pandemic on consumers and companies, by monetary and fiscal stimulation to an extend that has never been done before. In the beginning of the year there was a substantial decrease of stock markets, but they recovered later in the year. Several stock markets finished the year even sky high, partly due to the announcement of several, very effective, vaccines for the Covid-19 virus. Interest rates further decreased and even reached a historic low level.
Smart Investing at LifeSight
LifeSight makes sure that your pension investments match your age and income. Are you relatively young, then you are automatically investing more in the Rendement fund which is targeted at reaching a high return. The returns are needed in order to accrue a sufficient pension. The closer you get to your retirement date, the more you invest in the Matching funds which have a defensive nature. You use the money you have saved with LifeSight to buy a pension with an insurer of your choice when you retire. You hand over the saved capital to an insurance company and will receive a lifelong monthly pension for that.
Below you can find an overview of the achieved returns on our LifeSight investment funds, both on the year 2020 as since the start of the investment fund (4 November 2014). The achieved fund returns will be compared to the returns of the fund benchmark, a measure of performance to compare and assess the returns of the LifeSight funds.
All shown investment returns of the LifeSight funds are before deducting the yearly fund costs (OCF) and after deducting all transaction costs.
| 2020 fund return | 2020 benchmark | Since start fund return (average per year) | Since start benchmark (average per year) | |
|---|---|---|---|---|
| LifeSight Matching Kort fund | 4,6% | 6,3% | 3,4% | 3,1% |
| LifeSight Matching Lang fund | 11,6% | 17,8% | 7,4% | 7,4% |
| LifeSight Rendement fund | 4,2% | 3,2% | 8,1% | 7,6% |
LifeSight Matching funds
You invest more and more in Matching funds the closer you get to your retirement age. This investment fund mainly contains French and German government bonds.
The goal of these funds is to keep the risk of a setback as low as possible such that your expected pension will probably closely match the pension you can buy at an insurer. Setbacks may occur when interest rates decrease or prices increase (inflation) in the period before retirement. With lower interest rates the insurers demand more capital for the same pension payment. With increasing inflation you can buy less pension as all becomes more expensive. Therefore, the benchmark of your Matching funds is linked to the tariffs of the insurers for converting your capital to a monthly payment with indexation based on inflation.
Just like in 2019, Interest rates have fallen sharply during 2020. A decrease in interest rates has a positive impact on the value of the underlying government bonds in the LifeSight Matching funds. This effect is larger for bonds with a longer duration. As such, the return on the LifeSight Matching Lang fund in 2020 was higher than for the LifeSight Matching Kort fund.
Because of the decrease in interest rates, the LifeSight Matching Lang fund achieved a positive return of +11.6%. The LifeSight Matching Kort fund achieved an investment return of +4.6%.
In comparison to the benchmark funds, the LifeSight Matching Lang fund lags behind. This is mainly because inflation-linked government bonds experienced less decrease compared to the interest rate used for the annuity purchase rates of insurers (the benchmark). However, the results since the start of the LifeSight Matching funds are in line with or better than the benchmarks.
LifeSight Rendement fund
This fund invests in a group of different investment funds with a goal to reach a good return at reasonable risk. LifeSight does not invest itself but chooses the best asset managers to invest your money in the Rendement fund.
Although the amount of Covid-19 infections increased at the end of 2020, the total investment return for equities from developed markets as well as equities from emerging markets was positive in 2020. This is partly due to the unprecedented stimulation by governments and central banks and due to the long-term low interest rate expectations of investors. The prospect of multiple effective vaccines for the Covid-19 virus made several stock markets increase to new record levels.
These market developments also had positive consequences on the performance of the LifeSight Rendement fund. Especially American and Asian stock markets performed very well in 2020 (measured in local currency), partly due to the bigger weight of the technology sector. However, worldwide real estate equities had a disappointing year because of the Covid-19 pandemic. Broadly spreading the investments across multiple global investment categories resulted in a fund return of +4.2% in 2020.
Since its inception, the LifeSight Rendement fund has achieved a higher return than its benchmark year on year. Also this year, the performance of the LifeSight Rendement fund is better than that of the benchmark. On average, an additional return of 0.5% per year has now been achieved since the start.
Return on your pension capital
You can find your personal current annual return in 2020 and your personal investment mix under My Investments on MijnLifeSight. You can see a forecast of your expected pension benefit in your Dasboard.
More information and Self Investing
For more information on the investment funds of LifeSight
and the returns of the Self Investing funds, visit the factsheets.