We calculate the expected long-term average returns for each portfolio as well as the spread of likely outcomes that you see shown in the chart using long-term historical data. These projected returns are based on the estimated returns for a portfolio of equities and government bonds, in different percentages depending on the portfolio risk level. In general, the higher the risk of a portfolio the greater the proportion of equities - both in the UK and overseas - and so a higher level of expected return.
The fan charts identify the probabilities of achieving various possible outcomes at different time horizons, based on the historic volatility of each asset class since 1986. The range of theoretical return projections are calculated using expected returns and volatility.
The projections include the effect of our highest standard annual fee of 1.0% (including VAT). We also assume both that income is reinvested and that any monthly contributions you select are maintained.
The projections do not include the effects of tax on investment income, tax on capital gains, of changing your risk profile, or of future changes to our investment strategy.
