The Irish Life MAPS range turned 10 years old on May 17th
Here, we have a look under the bonnet at the different methods employed to reduce volatility
Diversification
Often referred to as the 'only free lunch in investing' diversification is at the heart of the Irish Life MAPS range.
Not only do the funds diversify across asset classes, but within each class there is further diversification . For example, within the shares component there are allocations to global shares and low volatility shares.
This level of diversification aims to ensure that the performance of the funds is not dependent on any one asset type, sector, region or management style. Removing this dependence aims to produce a smoother investment journey over time.
Asset allocation
ILIM undertakes regular reviews of Irish Life MAPS, evaluating current asset and manager allocations.
The review process takes into account short, medium and long term expectations for investment markets with a view to optimising the asset mix.
Strategic reviews take place annually based on long term expectations whilst tactical review take place monthly and, during these reviews ILIM seeks opportunities to either enhance risk management and/or increase the expected fund returns.
DSC (Dynamic Shares to Cash)
Each Irish Life MAPS fund uses ILIM's innovative DSC model on a portion of its' Global Shares allocation. This quantatative model, developed by ILIM looks at three broad categories and seeks to reduce the amount invested in shares & increase cash when it identifies greater potential for stock market falls.
By assessing factors in Market Momentum, Valuations & Global Macroeconomics, DSC looks at long-term movements and trends within the markets as opposed to reacting to one-off jumps or shocks.
Currency Hedging
ILIM uses a systematic currency hedging process within the Irish Life MAPS range. This strategy aims to limit the negative impact that foreign currency moves can have on investment returns.
ILIM use a proprietary approach to identify key factors that, when combined, indicate when it may be beneficial to hedge foreign currency exposure.
This strategy contributes to Irish Life MAPS smoother investment journey by mitigating the risk of loss which can occur from moves in foreign currency valuations.
Credits:
Created with an image by NorGal - "bank notes"