Master Trusts unpacked

Default investment strategies

This report offers a look back at performance throughout 2023, a year predominantly characterised by high inflation and elevated interest rates. We will delve into how these main trends have shaped the investment landscape and, in turn, affected the various master trust default strategies.

For employers and trustees alike, who are reviewing or selecting a master trust, this report aims to shed light on the nuances of default design approaches and their performance in a year when equity and bond markets unexpectedly bounced back despite adverse market conditions.

Similar to last year, we have decided against naming the individual master trusts in our performance breakdown. Our rationale is that while historical performance is an important consideration, it is not the sole factor valued by savers. We wish to ensure that the overall value proposition offered by these master trusts is not overshadowed.

Looking forward to 2024, we anticipate that investment markets will remain volatile, posing challenges for master trusts. The strategies and lessons applied from the experiences of 2023, particularly how they managed high inflation and interest rates, could significantly influence the widening or narrowing of performance gaps between trusts.

What’s inside?

• How the investment landscape in 2023 has impacted master trust investment strategies.
• We examine the performance of master trusts during 2023.
• Which strategy is performing best over long periods?
• Evaluate whether all glidepaths are equal.
• Explore whether the variation in returns is reducing.