THE GROWTH OF MULTI-ASSETFUNDSTREND OR FAD?Justin Onuekwusi, CFAMulti-asset Fund ManagerJanuary 2013This document is for f...
EVOLUTION OF MULTI-ASSET FUNDS                                 2
SMOOTHER RETURNS FOR THE PEER GROUPS?               IMA multi-asset peer group annual average returns1990-2010         10%...
GOVERNANCE AND RISK CONTROLSTHE COST OF GETTING IT WRONGIMA Mixed Investment 40-85% Shares* – Year on Year Performance tab...
TARGETING RISKTHE EVOLUTION OF MULTI-ASSET FUNDS    The old way –               Composite      traditional             ben...
EXPANSION OF THE UNIVERSE                                                                                    Truly Multi-A...
BLENDING ACTIVE AND PASSIVE                                         Cost                                      effective,  ...
RISK TARGETING FUNDSTHE NEXT GENERATION                       8
RETAIL DISTRIBUTION REVIEWSUITABILITY AND OUTSOURCING
INTRODUCING ABSOLUTE RISKFUNDS TARGETING A BAND OF VOLATILITY (6 APRIL 2012)Funds aim to achieve highest return within def...
AVIVA INVESTORS MULTI-ASSET FUNDSCHARACTERISTICS                                Dynamic                                   ...
KEY BENEFITSAVIVA INVESTORS MULTI-ASSET FUNDS– Solution to help you meet your clients’ needs in the post RDR environment c...
AVIVA INVESTORS MULTI ASSET FUND II*PERFORMANCEPercentage Growth Total Return, Tax default, in LC                       12...
AVIVA INVESTORS MULTI-ASSET FUND IV*PERFORMANCEPercentage Growth Total Return, Tax default, in LC                       15...
AVIVA INVESTORS MULTI-ASSET FUND V*PERFORMANCEPercentage Growth Total Return, Tax default, in LC                       15 ...
FUND POSITIONINGAS AT 31 DECEMBER 2012                  Exposure (%)               MAF I     MAF II     MAF III    MAF IV ...
SUMMARY– Multi-asset funds becoming more popular due to their many benefits– Evolution of multi-asset funds – From peer gr...
IMPORTANT INFORMATION This document is intended for professional investors and experienced advisors only. The content is n...
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Aviva investors

  1. 1. THE GROWTH OF MULTI-ASSETFUNDSTREND OR FAD?Justin Onuekwusi, CFAMulti-asset Fund ManagerJanuary 2013This document is for financial advisers only. It is not to be viewed by or used with retail clients.
  2. 2. EVOLUTION OF MULTI-ASSET FUNDS 2
  3. 3. SMOOTHER RETURNS FOR THE PEER GROUPS? IMA multi-asset peer group annual average returns1990-2010 10% IMA Flexible Investment IMA Mixed Investment 40-85% Shares 8% Global EquityReturn IMA Mixed Investment 20-60% Shares 6% 4% 4% 6% 8% 10% 12% 14% 16% Risk Source: Lipper Global Funds database. Absolute risk is measured by standard deviation of the monthly returns of the IMA peer group 1 January 1990 to 31 December 2010. Bid to bid, net of fees in sterling. Retail share class and onshore. Global Equity is Association of British Insurers peer group. 3
  4. 4. GOVERNANCE AND RISK CONTROLSTHE COST OF GETTING IT WRONGIMA Mixed Investment 40-85% Shares* – Year on Year Performance table Year 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 Top performer 4.08 31.18 23.71 32.66 27.17 21.66 14.66 37.47 21.08 8.52 Average -17.65 17.40 8.96 19.81 9.84 4.14 -21.75 19.97 12.34 -5.61 Performance Bottom Performer -26.36 9.05 6.00 14.21 -1.93 -2.01 -38.51 -0.01 6.67 - 18.74 FTSE All -Share -22.68 20.86 12.84 22.04 16.75 5.32 -29.93 30.12 14.51 -3.46>50% dispersion between top and bottom performers 10% of IMA Mixed Investments 40-85% Shares* underperformed 100% equity index*IMA sector name changed on 1 January 2012, previously known as IMA Balanced Managed sector.Source: Lipper Global Funds database as at 31 December 2011. Yearly returns of the IMA Mixed Investment 40-85% Shares peer group.Bid to bid, net of fees in sterling. Retail share class and onshore. Past performance is not a guide to the future. 4
  5. 5. TARGETING RISKTHE EVOLUTION OF MULTI-ASSET FUNDS The old way – Composite traditional benchmark vs. The next generation? balanced managed absolute return Peer group Target Return Target Risk benchmarks …but what Designed to meet your “Looking over your about risk clients’ attitude to risk Shoulder” Multi-Asset Funds (MAF) Team 5
  6. 6. EXPANSION OF THE UNIVERSE Truly Multi-Asset Traditional Managed Fund SolutionMulti-Asset Funds or “New balanced” is now dominating the investment landscape for mixed assetstrategies 6
  7. 7. BLENDING ACTIVE AND PASSIVE Cost effective, potentially Active Passive improved risk-adjusted returns 7
  8. 8. RISK TARGETING FUNDSTHE NEXT GENERATION 8
  9. 9. RETAIL DISTRIBUTION REVIEWSUITABILITY AND OUTSOURCING
  10. 10. INTRODUCING ABSOLUTE RISKFUNDS TARGETING A BAND OF VOLATILITY (6 APRIL 2012)Funds aim to achieve highest return within defined risk bands Volatilityrange for each I II III IV Vfund 0 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 % VolatilityThe five funds have differing levels of risk target. Note this ‘risk’ is how volatile the fund’s performance is by itself (‘absolute risk’) and not howvolatile it is compared to other funds (‘relative risk’). The Funds aim to remain within volatility bands on a rolling 3-year basis. 10
  11. 11. AVIVA INVESTORS MULTI-ASSET FUNDSCHARACTERISTICS Dynamic asset allocation Internal IMA and Specialist external managers Risk Targeting Active/ NURS passive blend
  12. 12. KEY BENEFITSAVIVA INVESTORS MULTI-ASSET FUNDS– Solution to help you meet your clients’ needs in the post RDR environment creat– Truly long-term diversified multi-asset solution– Managed by a specialist team – central capability to Aviva InvestorsFor further information about the risks involved when investing in these Funds please read the Key Investor Information Document andSupplementary Information Document when issued. Copies can be obtained by visiting our website www.avivainvestors.co.uk 12
  13. 13. AVIVA INVESTORS MULTI ASSET FUND II*PERFORMANCEPercentage Growth Total Return, Tax default, in LC 12 10 Aviva Investors Multi- 8 asset Fund II Percentage growth 6 IMA Mixed Investment 4 20-60% Shares 2 0 -2 -4Source: Aviva Investors / Lipper Hindsight as at 31 December 2012. Performance is net of fees in sterling, retail share class 1, income reinvested,mid prices as of mid day.*The Fund name changed on 6 February 2012 – previously known as Aviva Investors Cautious Multi -asset Fund.Past performance is not a guide to the future. 13
  14. 14. AVIVA INVESTORS MULTI-ASSET FUND IV*PERFORMANCEPercentage Growth Total Return, Tax default, in LC 15 10 Aviva Investors Multi- asset Fund IV Percentage growth 5 IMA Flexible 0 -5 -10Source: Aviva Investors / Lipper Hindsight as at 31 December 2012. Performance is net of fees in sterling, retail share class 1, income reinvested,mid prices as of mid day.*The Fund name changed on 6 February 2012 – previously known as Aviva Investors Balanced Multi -asset Fund.Past performance is not a guide to the future. 14
  15. 15. AVIVA INVESTORS MULTI-ASSET FUND V*PERFORMANCEPercentage Growth Total Return, Tax default, in LC 15 10 Aviva Investors Multi- asset Fund V Percentage growth 5 IMA Global 0 -5 -10 -15Source: Aviva Investors / Lipper Hindsight as at 31 December 2012. Performance is net of fees in sterling, retail share class 1, income reinvested,mid prices as of mid day.*The Fund name changed on 6 February 2012 – previously known as Aviva Investors Adventurous Multi -asset Fund.Past performance is not a guide to the future. 15
  16. 16. FUND POSITIONINGAS AT 31 DECEMBER 2012 Exposure (%) MAF I MAF II MAF III MAF IV MAF V UK Equity 4.1% 5.1% 9.7% 10.4% 6.8% European Equity 2.7% 11.0% 12.7% 17.6% 6.2% North America Equity 8.0% 17.2% 24.6% 24.9% 7.4% Japanese Equity 1.0% 1.9% 3.0% 3.4% 3.4% Pacific Basin Equity 2.1% 5.2% 5.1% 12.6% 5.0% EMEA equities 0.1% 0.7% 1.5% 2.8% 16.9% Asia equities 0.3% 2.3% 5.1% 9.7% 28.4% LATAM equities 0.1% 0.8% 1.7% 3.3% 20.9% Total equities 18.3% 44.2% 63.5% 84.6% 95.0% Convertibles 0.0% 2.0% 3.0% 1.9% 0.0% Gilts 4.7% 3.9% 0.2% 0.0% 0.0% UK Credits 3.0% 4.4% 4.9% 0.9% 0.0% EM Govt Bonds(local ccy) 1.0% 2.4% 2.8% 1.8% 2.7% EM Bonds ($) 0.0% 0.0% 0.0% 0.0% 0.0% EM Linkers 0.0% 0.0% 0.0% 0.4% 0.0% Developed Bonds 28.1% 24.2% 8.7% 0.9% 0.0% Global High Yield 2.8% 2.1% 5.0% 1.0% 1.9% Total Fixed Income 39.6% 37.1% 21.5% 4.9% 4.6% Commodities 0.4% 1.7% 3.5% 2.2% 0.8% Property 3.4% 4.3% 3.2% 2.8% 0.0% Absolute Return 2.2% 1.4% 1.1% 0.9% 0.0% Cash 36.0% 9.3% 4.3% 2.6% 0.0%Source: Aviva Investors 16
  17. 17. SUMMARY– Multi-asset funds becoming more popular due to their many benefits– Evolution of multi-asset funds – From peer groups to absolute risk– Trend or Fad?– Absolute risk – the next generation of multi-asset funds 17
  18. 18. IMPORTANT INFORMATION This document is intended for professional investors and experienced advisors only. The content is not approved for use with retail investors. The information provided in this document and any appendix is confidential and should only be used for the purposes requested. Except where stated as otherwise, the source of all information is Aviva Investors as at 31 December 2012. Any future returns and opinions expressed are based on the internal forecasts of Aviva Investors and should not be relied upon as indicating any guarantee of return from an investment managed by Aviva Investors. No part of this document is intended to constitute advice or recommendations of any nature. Where performance has been illustrated it is not intended to be a guide to the future. Full details of the Aviva Investors products and services are available on request. The value of assets are subject to market fluctuations and can move irrationally and be unpredictably affected by many and various factors including political and economic events and rumours and as such the value of investments may go down as well as up and your clients may receive less than the original amount invested. Past performance is not a guide to the future. There can be no assurance that these Funds will meet their investment objectives or that they will stay within their target volatility ranges. As the Funds will be subject to short-term market fluctuations and they aim, on average, to reflect investor risk profiles, over any three year period, they should be viewed as medium to long-term investments. As these Funds may invest outside of the UK in assets denominated in currencies other than sterling, any currency exchange rate movement may cause the value of an investment to fall as well as rise. For further information please read the Key Investor Information Document and Supplementary Information Document. Copies can be obtained by visiting our website www.avivainvestors.co.uk Aviva Investors is a business name of Aviva Investors UK Fund Services Limited, the Authorised Fund Manager. Registered in England No. 1973412. Authorised and regulated by the Financial Services Authority. FSA Registered No. 119310. Registered address: No 1. Poultry, London EC2R 8EJ. An Aviva company. www.avivainvestors.co.ukCI062230 09/2012 18
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