Levels of diversification

Transcription

1 Multi-Asset (MA) Active Funds Levels of diversification Past performance is not a guide to future performance.

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3 Levels of diversification What are levels of diversification? At Architas we believe that diversification is central to any investment portfolio. Being too concentrated in any one investment can possibly lead to higher risk and greater ups and downs in investment returns. Diversification means spreading the portfolio across different types of investment. Put simply, it s not putting all your eggs in one basket. We spread investments by: using different classes of assets; investing in different geographic regions; and using several different investment managers. Why are levels of diversification important? While there are no guarantees, this approach may reduce the combined risk of the overall portfolio and means that you are not relying on the performance of a narrow selection of investments. It may help to achieve more consistent investment returns than if you just invested in one class of asset or with any one fund manager. Past performance is not a guide to future performance. The value of investments and any income from them can go down as well as up and is not guaranteed, and you could get back less than you invest. classes of assets What is diversification across classes of assets? There are five main classes of asset money markets, bonds, property, alternatives and shares. By spreading investments across different classes, you could possibly benefit from more consistent returns than a fund which invests in only one. Why is spreading investments across classes of assets important? It may help to reduce the ups and downs of investment returns, as the potential losses in one class of asset could possibly be softened by gains in another. Diversification within classes of assets Why is diversification within classes of assets important? Within each class of asset it is possible to diversify further. Each one offers a range of investment options for example across countries, industries, types of properties and bonds. Spreading investment across countries, industries, types of properties and types of bonds helps to balance the overall portfolio. Spreading it out even further within classes of assets means that the portfolio is not concentrated in any one area and may help to reduce the effect of a downturn in a specific class of asset or geographic region. 1

4 investment managers Our funds invest in funds managed by other investment managers. This technique is commonly referred to as a fund of funds structure. What is diversification across investment managers? Investment managers with different investment styles tend to perform better at different times under different economic and market conditions. We combine a range of investment managers with complementary styles using sophisticated techniques to make sure we achieve a spread of investments. Why is spreading investments across investment managers important? Spreading investments across managers with a range of investment styles helps to balance the overall portfolio. It means that the portfolio is not overly exposed to any one style and, as a result, when one investment style is out of favour, the overall portfolio is not affected in a significant way. We use a selection of investment managers from a range of well-known firms including: 2

5 Architas investment process What is the Architas investment process? We have a dedicated team of in-house professionals constantly researching, monitoring and managing a combination of specialist investment managers. We use a combination of investment managers to provide an effective spread of investments. How do we choose our investment managers? We have designed our investment process to find the most appropriate mix of investment managers to build well spread out portfolios. The asset allocation model provided by EValue suggests a benchmark of which classes of assets to invest in and in what proportion. We use our unique screening tool, MosaIQue by Architas, to review all funds available to identify funds that have delivered consistent performance in the past. Research then tells us if this is the result of luck or the skill of the managers. We look for a sound investment philosophy, an effective management process, a stable company environment and a settled investment team. We aim to achieve a spread of investments by investing in appropriate active funds (active funds use a style of investing that aims to outperform the performance of a market index). We use in-depth research by our expert in-house investment team to find who they believe are the best active managers in their fields. Our fund managers use research in choosing assets alongside their skills to pick the most appropriate funds to invest in. What are the benefits of our investment process? We constantly monitor and review our investments. We do this by creating portfolios of investments, carrying out thorough research, using a mix of investment managers, constantly reviewing the investments and regular rebalancing (buying and selling funds to maintain the correct levels of each class of asset). We also monitor our underlying funds with the aim of making sure they perform as expected and do not take on risk we cannot justify. How does the investment process work? Asset allocation We spread the investment across the relevant areas (money markets, property, shares, alternatives or bonds). Researching and choosing a manager We use a variety of tools to sift through information on investment managers and pinpoint those we feel are worthy of further attention. Managing risk We choose investment managers with different characteristics that complement each other. Whilst there are no guarantees, the aim is to deliver more stable returns. Monitoring We monitor each investment manager using a range of tools to make sure that they continue to deliver. We also use our monitoring systems to make sure that each fund keeps to its investment aim. 3. 3

6 Architas Multi-Asset (MA) Active Reserve Fund Invests in shares of UK and international companies and in corporate and government bonds. Aims to achieve long term growth from a combination of income and capital growth. classes of assets geographic regions investment managers 4 Due to rounding, the figures shown in each of the Fund breakdowns may not add up to 100% and the allocations may change. Information from Architas, correct as at 29 December 2017.

7 The Fund is spread across the following classes of assets. l Other 54.12% lcash money market 30.00% lalternatives 17.27% lproperty 6.85% l Bonds 45.88% l UK gilts 23.11% l UK corporate 9.22% l Global 5.24% l High yield 5.01% l Global government 2.30% Global emerging l market debt 1.00% We may change the ratios between these classes of assets. Although the debt and debt-related securities that we invest in will usually be of investment-grade quality (that is, with a credit rating of at least BBB- as rated by Standard & Poor s, or Baa3 as rated by Moody s), this Fund may also invest in non-investmentgrade securities. Anything below B is considered non-investment grade by Fitch Ratings. MA Active Reserve Fund The Fund is spread across the following countries and regions. luk 69.18% lglobal* 29.82% lemerging markets 1.00% * Funds are grouped according to their benchmarks. Global includes all funds which do not have a specific regional benchmark. The Fund is spread across the following investment managers. lblackrock UK Gilts All Stocks Index 15.08% lhsbc Global Liq Sterling Liquidity 14.89% BlackRock Institutional Cash Series l Sterling Liquidity 14.34% lvanguard UK Long Duration Gilt Index 8.03% lkames Investment Grade Bond 5.22% llegal & General UK Property 4.94% linvesco Corporate Bond 4.00% ltritax Big Box 3.30% linsight LIBOR Plus 3.28% lubam Global High Yield Solutions 2.97% lmedicx 2.97% lstarwood European Real Estate Finance 2.71% ljohn Laing Infrastructure 2.57% lspdr Barclays 1-5 Year Gilt ETF 2.30% lishares Physical Gold ETC 2.05% lfair Oaks Income 2.04% lcivitas Social Housing 2.02% ltwentyfour Income 1.97% lf&c Commercial Property 1.91% lcatco Reinsurance Opportunities 1.65% lvontobel Emerging Markets Debt 1.00% lcash 0.77% 5

8 Architas Multi-Asset (MA) Active Moderate Income Fund Invests in shares of UK and international companies and in corporate and government bonds. Aims to provide a higher level of income compared with current interest rates. classes of assets geographic regions investment managers 6 Due to rounding, the figures shown in each of the Fund breakdowns may not add up to 100% and the allocations may change. Information from Architas, correct as at 29 December 2017.

9 The Fund is spread across the following classes of assets. l Bonds 61.57% l UK corporate 25.71% l UK gilts 23.51% l Global 4.60% Global emerging l market debt 3.08% l High yield 3.03% l Global government 1.64% l Equities 25.36% l UK 10.07% l Japan 5.88% l North America 4.99% l Europe but not UK 1.93% l Asia Pacific but not Japan 1.47% l Global emerging markets 1.01% l Other 13.07% l Alternatives 7.17% l Cash money market 4.17% l Property 1.72% We may change the ratios between these classes of assets. Although the debt and debt-related securities that we invest in will usually be of investment-grade quality (that is, with a credit rating of at least BBB- as rated by Standard & Poor s, or Baa3 as rated by Moody s), this Fund may also invest in non-investmentgrade securities. Anything below B is considered non-investment grade by Fitch Ratings. MA Active Moderate Income Fund The Fund is spread across the following countries and regions. luk 65.20% lglobal* 16.44% ljapan 5.88% lus 4.99% lemerging Markets 4.09% leurope 1.93% lasia Pacific but not Japan 1.47% * Funds are grouped according to their benchmarks. Global includes all funds which do not have a specific regional benchmark. The Fund is spread across the following investment managers. lblackrock UK Gilts All Stocks Index 15.45% lkames Investment Grade Bond 9.87% linvesco Corporate Bond 8.94% lvanguard UK Long Duration Gilt Index 8.07% ljanus Henderson Preference & Bond 6.90% lcf Lindsell Train UK Equity 5.99% lartemis US Extended Alpha 3.93% ljp Morgan Sterling Liquidity 3.06% lubam Global High Yield Solutions 3.03% linsight LIBOR Plus 2.97% lbaillie Gifford Japanese 2.94% ljo Hambro UK Equity Income 2.09% lblackrock Emerging Markets Bond 2.08% ltb Evenlode Income 1.99% lvanguard FTSE Japan 1.95% lblackrock Continental Euro Income 1.93% ljohn Laing Infrastructure 1.92% ljohn Laing Environmental Assets 1.91% lamedeo Air Four Plus 1.88% lf&c Commercial Property 1.72% lspdr Barclays 1-5 Year Gilt ETF 1.64% ltwentyfour Income 1.63% lcatco Reinsurance Opportunities 1.46% lcash 1.12% lishares Edge S&P 500 Minimum Volatility 1.07% lrwc Global Emerging Markets 1.01% lvontobel Emerging Markets Debt 1.00% lman GLG Japan Core Alpha 1.00% lblackrock Asia Pacific Equity Income 0.74% lhermes Asia Ex Japan Equity 0.73% 7

10 Architas Multi-Asset (MA) Active Intermediate Income Fund Invests in shares of UK and international companies and in corporate and government bonds. Aims to achieve an above-average level of income and maintain capital over the medium to long term. classes of assets geographic regions investment managers 8 Due to rounding, the figures shown in each of the Fund breakdowns may not add up to 100% and the allocations may change. Information from Architas, correct as at 29 December 2017.

11 The Fund is spread across the following classes of assets. l Equities 55.94% l North America 22.02% l UK 16.89% l Japan 8.93% l Asia Pacific but not Japan 3.15% l Europe but not UK 2.93% l Global emerging markets 2.02% l Bonds 28.82% l UK corporate 17.95% l UK gilts 7.37% l Global 3.49% Global emerging l market debt 0.01% l Other 15.24% l Alternatives 7.49% l Cash money market 5.98% l Property 1.77% We may change the ratios between these classes of assets. Although the debt and debt-related securities that we invest in will usually be of investment-grade quality (that is, with a credit rating of at least BBB- as rated by Standard & Poor s, or Baa3 as rated by Moody s), this Fund may also invest in non-investmentgrade securities. Anything below B is considered non-investment grade by Fitch Ratings. The Fund is spread across the following countries and regions. luk 49.95% lus 22.02% lglobal* 10.98% ljapan 8.93% lasia Pacific but not Japan 3.15% leurope 2.93% lemerging Markets 2.04% * Funds are grouped according to their benchmarks. Global includes all funds which do not have a specific regional benchmark. MA Active Intermediate Income Fund The Fund is spread across the following investment managers. lartemis US Extended Alpha 12.69% lrobeco BP US Premium Equities 8.31% lcf Lindsell Train UK Equity 7.87% lishares Corporate Bond Index 7.34% ljo Hambro UK Equity Income 7.07% lkames Investment Grade Bond 6.75% lbaillie Gifford Japanese 6.00% lcash 5.95% ljanus Henderson Preference & Bond 3.86% lblackrock UK Gilts All Stocks Tracker 3.85% lvanguard UK Long Duration Gilt Index 3.51% lvanguard FTSE Japan 2.94% lblackrock Continental Euro Income 2.93% lrwc Global Emerging Markets 2.02% ltb Evenlode Income 1.95% linsight LIBOR Plus 1.95% ljohn Laing Infrastructure 1.94% ljohn Laing Environmental Assets 1.92% lamedeo Air Four Plus 1.91% lf&c Commercial Property 1.77% lcatco Reinsurance Opps 1.72% lblackrock Asia Pacific Equity Income 1.68% ltwentyfour Income 1.54% lishares Edge S&P 500 Minimum Volatility 1.02% lman GLG Japan Core Alpha 0.96% lhermes Asia Ex Japan Equity 0.51% ljp Morgan Sterling Liquidity 0.03% lblackrock Emerging Markets Bond 0.01% 9

12 Architas Multi-Asset (MA) Active Progressive Fund Invests in shares of UK and international companies and in corporate and government bonds. Aims to achieve capital and income growth over the medium to long term. classes of assets geographic regions investment managers 10 Due to rounding, the figures shown in each of the Fund breakdowns may not add up to 100% and the allocations may change. Information from Architas, correct as at 29 December 2017.

13 The Fund is spread across the following classes of assets. l Equities 73.09% l UK 27.89% l North America 26.13% l Japan 12.08% l Europe but not UK 2.99% l Asia Pacific but not Japan 2.04% l Global emerging markets 1.97% l Bonds 15.49% l UK corporate 9.80% l UK index-linked gilts 2.97% l UK gilts 2.72% l Other 11.42% l Alternatives 5.92% l Cash money market 3.55% l Property 1.95% We may change the ratios between these classes of assets. Although the debt and debt-related securities that we invest in will usually be of investment-grade quality (that is, with a credit rating of at least BBB- as rated by Standard & Poor s, or Baa3 as rated by Moody s), this Fund may also invest in non-investmentgrade securities. Anything below B is considered non-investment grade by Fitch Ratings. The Fund is spread across the following countries and regions. luk 48.88% lus 26.13% ljapan 12.08% lglobal* 5.92% lasia Pacific but not Japan 2.04% leurope 2.99% lemerging Markets 1.97% * Funds are grouped according to their benchmarks. Global includes all funds which do not have a specific regional benchmark. The Fund is spread across the following investment managers. lcf Lindsell Train UK Equity 12.00% lkames Investment Grade Bond 9.80% lardevora UK Equity 8.07% lmajedie UK Equity 7.82% lrobeco BP US Premium Equities 7.75% lartemis US Extended Alpha 7.40% lbaillie Gifford Japanese 7.05% lab Concentrated US Equity 6.93% lcash 3.31% ljpmorgan Japan 3.12% lblackrock European Dynamic 2.99% lvanguard UK Long Duration Gilt Index 2.97% lblackrock UK Gilts All Stocks Index 2.72% lishares Edge S&P 500 Minimum Volatility 2.06% lhermes Asia Ex Japan Equity 2.04% lcatco Reinsurance Opportunities 2.00% lschroder US Mid Cap 2.00% lrwc Global Emerging Markets 1.97% ljohn Laing Infrastructure 1.96% lf&c Commercial Property 1.95% lamedeo Air Four Plus 1.95% lman GLG Japan Core Alpha 1.91% ljpmorgan Sterling Liquidity 0.24% MA Active Progressive Fund 11

14 Architas Multi-Asset (MA) Active Growth Fund Invests in shares of UK and international companies. Aims to provide capital growth over the medium to long term. classes of assets geographic regions investment managers 12 Due to rounding, the figures shown in each of the Fund breakdowns may not add up to 100% and the allocations may change. Information from Architas, correct as at 29 December 2017.

15 The Fund is spread across the following classes of assets. l Equities 91.91% l North America 41.16% l UK 20.84% l Japan 14.00% l Global emerging markets 8.04% l Europe but not UK 3.96% l Asia Pacific but not Japan 3.91% l Other 8.09% l Alternatives 4.30% l Property 2.34% l Cash money market 1.45% We may change the ratios between these classes of assets. Although the debt and debt-related securities that we invest in will usually be of investment-grade quality (that is, with a credit rating of at least BBB- as rated by Standard & Poor s, or Baa3 as rated by Moody s), this Fund may also invest in non-investmentgrade securities. Anything below B is considered non-investment grade by Fitch Ratings. The Fund is spread across the following countries and regions. lus 41.16% luk 24.62% ljapan 14.00% lemerging Markets 8.04% lglobal* 4.30% leurope 3.96% lasia Pacific ex Japan 3.91% * Funds are grouped according to their benchmarks. Global includes all funds which do not have a specific regional benchmark. The Fund is spread across the following investment managers. lrobeco BP US Premium Equities 12.33% lartemis US Extended Alpha 11.85% Alliance Bernstein SICAV I Concentrated l US Equity 11.66% lbaillie Gifford Japanese 9.98% lrwc Global Emerging Markets 8.04% lcf Lindsell Train UK Equity 7.96% lardevora UK Equity 5.13% lmajedie UK Equity 4.71% lman GLG Japan Core Alpha 4.02% lblackrock European Dynamic 3.96% lhermes Asia Ex Japan Equity 3.91% lschroder US Mid Cap 3.27% lfranklin UK Smaller Companies 3.04% lf&c Commercial Property 2.34% lamedeo Air Four Plus 2.29% lishares Edge S&P 500 Minimum Volatility 2.04% lcatco Reinsurance Opportunities 2.01% lcash 1.35% ljpmorgan Sterling Liquidity 0.10% MA Active Growth Fund 13

16 Architas Multi-Asset (MA) Active Dynamic Fund Invests in shares of UK and international companies. Aims to maximise the value of income arising from investments. classes of assets geographic regions investment managers 14 Due to rounding, the figures shown in each of the Fund breakdowns may not add up to 100% and the allocations may change. Information from Architas, correct as at 29 December 2017.

17 The Fund is spread across the following classes of assets. l Equities 92.39% l Global emerging markets28.23% l North America 23.94% l UK 15.19% l Asia Pacific but not Japan12.04% l Japan 9.96% l Europe but not UK 3.03% l Other 7.61% l Alternatives 4.20% l Property 2.32% l Cash money market 1.09% We may change the ratios between these classes of assets. Although the debt and debt-related securities that we invest in will usually be of investment-grade quality (that is, with a credit rating of at least BBB- as rated by Standard & Poor s, or Baa3 as rated by Moody s), this Fund may also invest in non-investmentgrade securities. Anything below B is considered non-investment grade by Fitch Ratings. The Fund is spread across the following countries and regions. lemerging markets 28.23% lus 23.94% luk 18.61% lasia Pacific ex Japan 12.04% ljapan 9.96% lglobal* 4.20% leurope 3.03% * Funds are grouped according to their benchmarks. Global includes all funds which do not have a specific regional benchmark. The Fund is spread across the following investment managers. lrwc Global Emerging Markets 10.16% lhermes Global Emerging Markets 9.89% Stewart Investors Global Emerging l Markets Leaders 8.18% lartemis US Extended Alpha 8.13% lhermes Asia Ex Japan Equity 7.62% lbaillie Gifford Japanese 6.94% lcf Lindsell Train UK Equity 6.06% Alliance Bernstein SICAV I Concentrated l US Equity 6.00% lrobeco BP US Premium Equities 5.75% lblackrock Asia Special Situations 4.42% lardevora UK Equity 4.09% lfranklin UK Smaller Companies 3.13% lblackrock European Dynamic 3.03% lman GLG Japan Core Alpha 3.02% lf&c Commercial Property 2.32% lamedeo Air Four Plus 2.20% lishares Edge S&P 500 Minimum Volatility 2.06% lschroder US Mid Cap 2.01% lcatco Reinsurance Opportunities 2.00% lmajedie UK Equity 1.91% lcash 1.09% 15 MA Active Dynamic Fund

18 Glossary of terms Shares Shares of companies are a popular choice for long-term investors. As a shareholder you share in the value of the company s assets through the share price and in the company s profits by possibly receiving dividends. Bonds Bonds are contracts that allow a number of investors to pool together to loan money to a company, government or other institution over a fixed term. The holders of the bonds then receive interest payments over the length of the term and get their initial investment (capital) back at the end. Bonds are usually issued by banks on behalf of the borrowing institution. If the borrowing institution fails, there is a risk that you will not receive back either the interest due or your original capital. Property We can invest in companies which own and manage a range of properties. The value of property is a matter of the valuer s opinion and not fact. Property will not contribute to diversifying your portfolio if you already hold a substantial percentage of your investments in property. There could be delays involved with property (disinvestments and switches) due to the fact that property can take time to sell. Money market Investors are usually very familiar with cash investments. These types of investments are not without risk as interest rates may be lower than inflation. However, they are usually lower risk than other classes of asset and are normally very accessible (easy to cash in). Although, there is also a possible risk if the institutions go out of business. Alternatives The alternatives class covers a range of investments. The main parts are commodities (such as oil), hedge funds, absolute return funds (an absolute return fund aims to make positive returns by using investment management techniques and classes of asset that differ from traditional funds), and infrastructure (such as communication and transport). Geographic region It is possible to invest in bonds, property and shares from different countries and regions across the world. 16

19 Important information * We will not accept any legal responsibility for any advice provided in relation to this document. We provide and manage the Architas funds and do not assess the suitability of our funds for individual investors. If any financial adviser, or network of advisers, is named on this document, it does not mean we have any knowledge of, or influence over, advice that you have received or will receive. Your financial adviser alone is responsible for any financial advice or recommendations provided in relation to your investment decisions. Past performance is not a guide to future performance. The value of investments and any income from them can go down as well as up and is not guaranteed, and you could get back less than you invest. The funds are allowed to invest over 35% of their assets in investments issued by a single local, national or supranational government. The funds can invest entirely in units of collective investment schemes. The value of investments can fall as well as rise purely on account of exchange rate fluctuations. You can invest in these funds through a number of financial products. These funds may not be appropriate for investors who plan to withdraw their money within five years. We take charges to cover the costs of managing the fund. If you are investing using a financial product, the product provider may take extra charges, and, if so, should give you details of these charges before you invest. If you need more information on any of our funds, you can ask us for a free copy of the Key Investor Information document (KIID) and the prospectus. The KIID is designed to help you make an informed decision before investing. You can also view or download all of our funds KIIDs from our website at architas.com, by following the Key Investor Information documents link from the home page and in the Information Centre. The Active funds referred to in this document are all collective investment schemes authorised and regulated by the Financial Conduct Authority. AXA is a worldwide leader in financial protection and wealth management. Architas operates three legal entities in the UK; Architas Multi-Manager Limited (AMML), Architas Advisory Services Limited (AASL) and Architas Limited. Both AMML and AASL are owned by Architas Limited, which is 100% owned by AXA UK plc (a company registered in England & Wales), with the ultimate parent and controlling company being AXA SA (a company registered in France). Architas Multi-Manager Limited is an investment company that provides access to other investment managers services through a range of multi-manager solutions, including regulated collective investment schemes. Architas Multi-Manager Limited in the UK works with strategic partners and AXA Group internal fund managers, to find out more information about this please visit architas.com/inhousestratpartners/. Architas Multi Manager Limited is a company limited by shares and authorised and regulated by the Financial Conduct Authority. It is registered in England: No Registered Office: 5 Old Broad Street, London, EC2N 1AD. * Plain English Campaign s Crystal Mark does not apply to the text on this page. 17

20 The Architas customer support team is on hand to answer your questions. Call * *Monday to Friday 9.00am 5.30pm; calls may be recorded. Calls are free from landlines and mobiles within the UK. Architas Multi-Manager Limited 5 Old Broad Street London EC2N 1AD architas.com ARC5153M Created 15 January 2017 Expires 17 January 2019