Standard Life - part of Phoenix Group - has linked with fund giant Fidelity to launch a new Smoothed Return Pension Fund which is designed to grow investments while offering some protection against the daily turmoil of investing.

It will be available exclusively through the Fidelity Adviser Solutions platform, initially on a pilot basis.

The new fund consists of a diversified multi-asset fund spreading assets across different geographical regions. The fund is priced using a mechanism that smooths its underlying returns. The smoothing mechanism helps reduce day to day volatility, the two firms said.

They said smoothing helps reduce the risks created by needing to withdraw income at regular but otherwise inopportune times, as well as arising from the unpredictability of life events.

The fund follows an estimated growth rate (EGR), which is the expected growth rate for the fund, less any fund charges. 

It is calculated using long term growth expectations of the underlying funds and uses data from external asset management companies who specialise in the analysis of different asset types and how they might perform in future market conditions.

The EGR is closely monitored on an ongoing basis to provide the potential for steadier growth over the medium to long term.

Standard Life will provide the fund structure, smoothing, valuation, and supporting capital, and will set and oversee the strategic asset allocation. The underlying assets will be managed by Fidelity’s asset management business.

The product will be piloted to a small group of financial advisers from March 2024, ahead of a full market launch later this year.

Dennis Pellerito, head of UK wholesale at Fidelity International, said: “As people spend longer in retirement, they require products and services which offer flexibility and can be tailored to their goals at any stage.”  

Claire Altman, managing director for individual retirement at Standard Life, said: “One of the biggest issues we currently face as an industry is ensuring good outcomes for people at retirement, which is at the very heart of the need for innovation.

"There is a lack of choice, especially for people looking for solutions to help manage daily stock market volatility when it comes to their retirement savings – a risk many planning for or already in retirement may feel unable to take.”