SMF 2: reflecting on five years
Five years on: real value, real outcomes and a potential smoother way back into markets
Volatility is the price of opportunity, if clients stay invested. Helping them do that consistently is one of advice’s greatest challenges.
Alan Thompson, Investment Development Manager.
Smooth Managed Fund 2 (SMF2) marked its fifth anniversary on 30 June this year. But more important than age is impact. The real question is whether the fund has delivered on what it set out to do, and whether it still provides value in today’s changing market for advisers and their clients.
What five years have demonstrated
SMF2 was designed to help clients benefit from long-term growth without having to experience every rise and fall of the markets. Five years on, the focus isn’t on short-term market movements, but on the overall investment journey.
Across a wide range of market conditions, the fund’s smoothing approach has worked as intended and has supported a steadier, more comfortable experience for clients.
This has been achieved by:
- Reducing day-to-day volatility
- Applying a forward-looking, consistent growth rate
- Softening the impact of short-term market shocks within a clear and transparent framework
The result has been a smoother investment journey, with less impact of short-term market ups and downs. As shown in the performance chart below, there have been just 2 days when market conditions prevented a positive daily increase. Put simply, a client invested from the start would have seen their fund value rise on 1,269 of the 1,271 days.
- Past performance is not a guide to the future. Any product charges and adviser fees would reduce returns.
Like the rest of the Smooth Managed Fund range, SMF2 doesn’t remove investment risk entirely, but seeks to reshape how that risk is experienced over time, aiming to provide a steadier, more predictable journey while staying aligned to the level of risk being taken.
In practice, this has meant:
- A more consistent pattern of fund progression
- Less day-to-day noise during periods of market stress
- Outcomes that better supported long-term investment discipline
For clients, how the journey feels matters. For advisers, it can be the difference between a client staying committed to their plan, rather than stepping away at the wrong time.
Why this matters now
For many advisers, the challenge today isn’t building portfolios, it’s overcoming client hesitation.
Clients may:
be holding higher levels of cash than planned
have missed part of the market recovery
feel ready to re-enter markets, but remain cautious about short-term volatility
This is where SMF2 can play a valuable role in conversations, its structure lends itself to:
Phased or gradual re-entry approaches
Clients returning after crystallising losses elsewhere
Those seeking market exposure without taking on full equity volatility
So, what’s the takeaway?
Five years on, Smooth Managed Fund 2 has:
- Proven itself through a range of real-world market conditions
- Helped deliver more stable path during periods of uncertainty
- Remained relevant in an environment where confidence, not opportunity, is often the biggest barrier
Today, that relevance shows up in everyday adviser client conversation. Because five years on, smoothing continues to focus on not just on what returns are delivered, but how they’re experienced.
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