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.