A great way to diversify your investments and lower your risk is to use asset allocation funds. They provide diversification within a single fund; each one is spread among asset classes, countries and investment management styles.
Spreading your money across a variety of investments helps manage your exposure to risk. Learn more about the value of diversifying your investments in this short video.
Description: Braelynn walks into her kitchen with a bag full of groceries. She sets them down on the counter.
Narrator: What kind of investor are you? Adventurous. Cautious. In between.
Description: She opens her cupboard and places three types of hot sauce on the shelf: hot, mild then medium in between.
Narrator: These are just some ways to express your comfort with investment risk.
Description: Camera zooms in on sauces.
Narrator: All investments have risk, some more than others.
Description: Cut to Braelynn, she stands and thinks.
Narrator: One way to reduce risk is through diversification.
Description: “Diversification” appears onscreen.
Narrator: That means spreading your money around in various investments.
Description: Cut to three pie graphs with investment graphics, each display a meter underneath to indicate a “Lower” or “Higher” amount of risk. Each graph is set to a low or medium level of risk.
Narrator: That way, if the market changes for one investment, you have other investments to keep you balanced.
Description: The investment in the middle becomes smaller and the risk level increases. The other two investments adjust to a lower risk to accommodate.
Narrator: If you think diversifying your investments is complicated, it doesn’t have to be.
Description: Camera pans down to reveal a large question mark, investments fall behind.
Narrator: This is where an asset allocation fund comes in.
Description: A pie graph of an asset allocation fund appears. Investment graphics surround the graph.
Narrator: An asset allocation fund automatically spreads your money amongst several funds, so they help manage risk.
Description: A dollar sign appears in the middle of the asset allocation fund. All investment graphics flip to show dollar signs.
Narrator: You can choose from two different types of asset allocation funds.
Description: Cut to two squares with text in each: “Target date funds” and “Target risk funds”. A cursor enters the frame and clicks on “Target date funds.”
Narrator: Target date funds are based on the year you expect to retire.
Description: A pie graph appears, labelled “Target date funds” with a counter below. The counter rolls to 2050.
Narrator: Target risk funds are based on your comfort with risk.
Description: Five pie graphs appear, labelled “Target risk funds.” A meter appears below to indicate a “Lower” or “Higher” amount of risk.
The graphs are arranged from low to high risk: “Conservative,” “Moderate,” “Balanced,” “Advanced” and “Aggressive.”
Narrator: Not sure how comfortable you are with risk?
Description: Cut to large question mark.
Narrator: Our investment personality questionnaire can help you figure that out.
Description: Cut to view of hands holding a tablet. The investment personality questionnaire is displayed.
Narrator: Now you can have a diversified investment portfolio that fits your needs and helps you reach your savings goals.
Description: Return to Braelynn in her kitchen, using the medium hot sauce to make dinner.
Narrator: Sign into GRS Access at canadalife.com
Description: Text “Sign into GRS Access at canadalife.com” appears with Canada Life logo and legal line: Canada Life and design are trademarks of The Canada Life Assurance Company. canadalife.com 1-800-724-3402.
There are three types of asset allocation funds: target risk, target date and risk-adjusted target date funds.
These asset allocation funds are matched to your unique investment personality, and the amount of risk that works for you. Fund managers ensure the diversified mix of investments continues to match your risk tolerance level. The funds are given names such as Conservative, Moderate, Balanced, Advanced or Aggressive.
Description: The back of a house is shown with a door and steps to the yard. Two open hands move in, framing the house.
Narrator: If you want your savings to grow, you usually need to take on some kind of risk.
Description: Daniel stands in his yard sketching on a clipboard.
Narrator: The trick is to find investments that match your comfort with risk.
Description: Cut to view of clipboard. He finishes his sketch of a new deck at the back of the house.
Narrator: Target risk funds can help you do that.
Description: Words “Target risk funds” appear onscreen.
Narrator: Each fund includes a unique mix of different types of investments.
Description: Five pie graphs appear. The graphs are arranged from low to high risk: “Conservative,” “Moderate,” “Balanced,” “Advanced” and “Aggressive.” A meter appears below to indicate a “Lower” or “Higher” amount of risk.
Narrator: For example, a conservative risk fund might focus on bonds and real estate.
Description: Camera zooms in on the “Conservative” risk fund. Investment graphics appear beside to represent bonds and real estate.
Narrator: That’s because these types of investments tend to provide a return that’s more consistent and less volatile.
Description: Camera pans to a graph of stock market fluctuations over time. The gradual growth of the “Conservative” risk fund is shown. A pile of money below the graph becomes larger as time progresses.
Narrator: On the other end of the scale is an aggressive risk fund, that would focus more on equities (or stocks).
Description: Camera pans back to the “Conservative” risk fund, moves past the “Moderate,” “Balanced” and “Advanced” graphs to the “Aggressive” risk fund. Investment graphics appear beside to represent stocks.
Narrator: Returns on these types of funds go up and down with the markets. You can make a lot or lose a lot in a short time frame.
Description: Camera pans back to the graph of stock market fluctuations. The pile of money below the graph gains or loses money as time progresses.
Narrator: To help manage risk, our investment managers spread each fund’s investments across different industries, countries, and groupings of investments with similar characteristics, laws and regulations.
Description: Investment graphics fill the frame. The investment manager’s hand moves in and five investments are chosen to build a fund.
Narrator: When returns for one type of investment are down, others tend to be up.
Description: Two of the investments become smaller and the others get larger. The hand replaces the smaller investments.
Narrator: The managers rebalance each fund to keep it within its specific target risk level.
Description: The five investments line up and two meters are displayed below, indicating a “Lower” or “Higher” amount of risk and a “Lower” or “Higher” return. The fund’s risk and return are set.
Narrator: Complete our investment personality questionnaire to find out how much risk you’re comfortable with.
Description: Cut to Daniel on his laptop at home.
Narrator: Once you know, it's easy to pick your matching target risk fund.
Description: The investment personality questionnaire is displayed on the laptop. He calculates his points from each section.
Narrator: And remember, as your life changes, your investment personality may change with it.
Description: Cut to Daniel outside in the summer, building the foundation for his deck. A “Conservative” risk fund is displayed.
Narrator: When that happens, you can just switch to a different target risk fund.
Description: Cut back to him in the winter, building the deck railing. A “Balanced” risk fund is displayed.
Narrator: What an easy, hands-off approach to investing.
Description: Daniel and his family are shown, enjoying the finished deck in the summer.
Narrator: Want to learn more about target risk funds?
Description: Camera pans.
Narrator: Sign into GRS Access at canadalife.com
Description: Text “Sign into GRS Access at canadalife.com” appears with Canada Life logo and legal line: Canada Life and design are trademarks of The Canada Life Assurance Company. candalife.com 1-800-724-3402
These asset allocation funds are managed toward your target retirement date. The investment mix in these funds is planned with an emphasis on growth in early years and gradually becomes more conservative as you approach your target retirement date. This planned approach to investment returns is referred to as a glide path.
Narrator: We’ve made it simple to start investing for your retirement.
Description: Jean is sitting on the couch in her living room with family, using her tablet.
Narrator: With our target date funds, all you need to do is decide when you want to retire, then select the fund closest to that year.
Description: Cut to view of tablet. She swipes up to reveal a calendar. The calendar cycles through each year and lands on 2048.
Narrator: Let’s say you want to retire in 2048. You’d choose our 2050 target date fund.
Description: Cut to pie chart of 2050 target date fund.
Narrator: Over the next few decades, the fund will gradually change from higher-risk to lower-risk investments.
Description: The pie chart moves to accommodate changes in risk type.
Narrator: For example, while you're still in your 30s, the fund uses higher-risk investments to help maximize growth.
Description: Cut to two line graphs, one for risk, the other for return. Age is shown from 30 to 65.
Narrator: As you get closer to your retirement, the fund uses more lower-risk investments to help protect your savings if the market falls.
Description: Both graphs start high then lower as age increases.
Narrator: A target date fund is a simple, hands-free approach to retirement savings.
Description: Frame zooms out to view Jean’s tablet and hands. Her hand swipes to reveal GRS Access “Plans” screen with RPP fund.
Narrator: You’ll get a mix of different investments and professional management, in one fund.
Description: She scrolls down to reveal asset mixes.
Narrator: It's practically effortless. Just choose one and relax.
Description: Return to Jean in her living room with family. She looks up from her tablet and smiles.
Narrator: Sign into GRS Access at canadalife.com
Description: Text “Sign into GRS Access at canadalife.com” appears with Canada Life logo and legal line: Canada Life and design are trademarks of The Canada Life Assurance Company.
Risk-adjusted target date
These asset allocation funds combine target risk and target date funds in a single fund. There are three sets of funds – conservative, balanced and aggressive. These funds match your retirement year with your risk profile, which you can determine with a short Risk-adjusted target date fund investment personality questionnaire.
Selecting a target risk, target date or risk-adjusted target date fund
You select a target date fund by choosing a fund that’s closest to your expected retirement year.
You select a target risk fund by completing the Investment personality questionnaire to determine your tolerance for risk and then you choose the fund that matches your investment personality.
You select a risk-adjusted target date fund by completing the Risk-adjusted target date fund investment personality questionnaire and determining your risk profile. Once complete, choose a fund that matches your risk profile and is closest to your desired retirement year