Aviva Investors Multi-Strategy (AIMS) Target Return Fund

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1 AIMS fund guide For financial advisers only. Not for distribution in Hong Kong or Singapore. Aviva Investors Multi-Strategy (AIMS) Target Return Fund Aiming to deliver long-term capital growth with managed volatility

2 Your clients may be struggling to achieve steady long-term returns in today s volatile markets. With asset correlations unusually high by historical standards, investment funds that have been designed to deliver specific returns have increased in popularity. One of these funds is the Aviva Investors Multi-Strategy (AIMS) Target Return Fund and we are delighted to confirm that it has been added to our fund range. Drawing on Aviva Investors global investment expertise, over any three-year period, the fund offers: 1. A targeted average annual return of 5% above the European Central Bank base rate before charges. 2. The aim of being less than half as volatile as global equities. 3. A global multi strategy fund that is free from benchmark constraints. To help achieve the fund s objectives, regardless of how financial markets are performing, the fund managers combine a diverse range of long-term investment strategies. The portfolio can be quickly adjusted to ensure it remains appropriately positioned as the outlook for markets and economies changes. Both USD and EUR versions of the fund are available for investment. Currency Code AMC FE sector Risk rating USD HDG L55 1.5% Absolute Return Grade 3* EUR L56 1.5% Absolute Return Grade 3* Over the following pages you can learn more about the fund. Alternatively, please get in touch with your sales contact. Philip Cernik Chief Marketing Officer, Middle East and Africa 01 Page Page Page Page Page 06 How the fund works Designed to perform in all market conditions The investment process Positioning the fund Seeking to provide meaningful outcomes * Grade 3 These funds take a balanced approach to investment by holding a diverse portfolio of assets. 2 Friends Provident International AIMS fund guide

3 01 How the fund works Traditional funds focus on investing in either a single asset class like equities, property or bonds or seek to spread risk by investing in multiple asset classes. A multi strategy approach is similar to multi asset investing in that it can invest in a broad range of asset classes. But while multi asset funds start with asset allocation, the starting point for the AIMS Target Return Fund is the outcome your clients need. The investment approach is unconstrained, meaning that the fund manager can look to profit from markets both rising and falling. Furthermore, the fund is not benchmarked against a market or peer group. This means that the fund managers are able to invest when and where they want with a large degree of sophistication and accuracy. By investing in a diverse range of strategies, the fund managers aim to meet the fund s return objective in different market conditions. Diversification helps to lower overall portfolio risk. 02 A portfolio designed to perform in all market conditions In an ever changing world, constructing diversified portfolios is not easy. In selecting the best strategies at any given time and integrating them into a cohesive portfolio, Aviva Investors assigns all positions to one of three groups: Market strategies Risk-reducing strategies Opportunistic strategies Market strategies Opportunistic strategies Risk reducing strategies Aviva Investors focus is on where their view differs from the markets over a three year investment horizon. Examples: Long Japanese equities Long US high yield credit Long Mexican government bonds These strategies aim to profit from market panics or the actions of non-profit seeking market participants, like central banks. Examples: Short German rates US multi-family housing market US inflation strategy These strategies aim to generate positive returns if Aviva Investors House View does not materialise, while being flat to mildly positive in the event it proves correct. In times of market stress, these strategies can significantly boost portfolio returns, thereby helping to control risk. Examples: Long US dollar vs other currencies Long Australian government bonds Long US large caps vs short US small cap Note: the above examples are shown for illustrative purposes only. 3

4 03 The investment process House view Idea evaluation Fund management Business cycle analysis Market outlook Risk scenarios Strategic Investment Group deliberates, debates and decides Manage cash flows Portfolio rebalancing Manage liquidity Idea generation Market strategies Opportunistic strategies Risk-reducing strategies Portfolio construction Position sizing Pre-trade risk Stress-testing Scenario analysis Preparing for the unpredictable Investment professionals from across the breadth of Aviva Investors global platform use their experience and insight from their own specialist fields, as well as the broad macro economic framework provided by the economists and strategists, to identify investment opportunities that might be suitable for the AIMS range. Idea evaluation Investment ideas are evaluated regularly by Aviva Investors Strategic Investment Group (SIG). The group is chaired by Aviva Investors chief executive officer, Euan Munro, and comprises the most experienced investment professionals from across the business, representing a wide range of disciplines. The SIG determines whether ideas are suitable for potential inclusion in the fund. 4 Friends Provident International AIMS fund guide

5 The fund is managed by Peter Fitzgerald, Dan James, Brendan Walsh and Ian Pizer. Together the team has 65 years experience in the investment industry and specialise in multi-asset and target return investing. Peter Fitzgerald Dan James Managing portfolio risk The fund s risk analysis team plays a vital role in helping the fund managers construct portfolios as risk considerations are at the heart of the process. The team works closely with the fund managers, rigorously testing individual investment strategies. All strategies pass through a stringent pre trade risk process before being incorporated into the fund. Strategies are assessed according to their expected risk and return, the ease with which they can be exited, and whether they will work if the fund grows substantially in size. And the team also tests how the overall portfolio would perform in different market conditions. Monitoring risk Brendan Walsh Ian Pizer The risk-analysis team continuously monitors risks both in terms of individual strategies and the overall portfolio. The team conducts regular stress tests on the portfolio and assesses optimal trade sizes. It analyses risk from the level of individual instruments and securities through to asset classes and ultimately the total fund level. In addition, an independent team monitors market risk separately. Combining strategies to help lower risk The investment professionals at Aviva Investors believe that portfolio construction is just as important as coming up with good investment ideas. Ideas are incorporated in the portfolio through investment strategies. By combining strategies in the appropriate proportions, the fund managers aim to diversify the sources of return, thereby reducing the overall risk of the portfolio. Managing derivatives risk As the fund managers invest significantly in derivatives contracts, they place particular emphasis on monitoring the potential impact of the derivatives being used. Using derivatives can result in a higher level of risk compared with investing directly in more traditional assets. However, the members of the investment team at Aviva Investors and risk specialists are highly experienced in managing derivatives risks. Their experience and careful risk control means that the level of derivatives risk introduced into the fund will remain consistent with the fund s risk profile. 5

6 04 Positioning the fund Sitting at the heart of a client s portfolio, the fund could be positioned as the core holding, providing access to a wide range of financial markets and asset classes. It may also provide stability for more specialised and often more volatile satellite holdings, such as investments in particular sectors or geographic regions. Alternatively, the fund might appeal to risk-averse clients seeking a fund with less volatility than a typical equity investment. 05 Seeking to provide meaningful outcomes Growing capital steadily over the long term to meet investors needs is not straightforward in today s increasingly uncertain world. The outcome oriented AIMS Target Return Fund has the objective of providing long-term capital growth whatever the investment climate. Since volatility is expected to be a consistent feature of the world s financial markets in 2016, we believe that the launch of the fund could be quite timely. No matter who they are, investors want simple and specific outcomes from their financial products. Euan Munro, Chief executive officer Aviva Investors 6 Friends Provident International AIMS fund guide 6

7 Key benefits of the fund 1 Focuses on delivering an outcome, not beating a peer group or market benchmark Targets an average annual return of 5% above the European Central Bank base rate (before charges) over any three year period. Strives to deliver target return and volatility objectives in all market conditions. 2 Managed volatility Aims to be less than half as volatile as global equities over any three year period. Looks to diversify risk by drawing on innovative ideas generated by investment specialists from across Aviva Investors. 3 Low correlation with traditional asset classes The fund is designed to generate returns with low correlations to traditional asset classes. It achieves this by investing in a diverse range of strategies across the global markets. 7

8 About Friends Provident International We are a leading financial services provider, with a reputation of trust, commitment and integrity, offering financial solutions to customers throughout their lives. Friends Provident International has over 35 years of international experience and is part of the Aviva group which has a heritage that dates back over 300 years. This document is for information only. It does not constitute as investment advice or an offer to provide any product or service by Friends Provident International and other companies within the Aviva group. We can accept no liability for loss of any kind incurred as a result of reliance on the information or opinions provided in this document. Please note that securities held within a fund may not be denominated in the currency of that fund and, as a result, fund prices may rise and fall purely on account of exchange rate fluctuations. Your client may get back less than they have paid in. Friends Provident International Limited: Registered and Head Office: Royal Court, Castletown, Isle of Man, British Isles, IM9 1RA. Telephone: +44(0) Fax: +44(0) Website: Incorporated company limited by shares. Registered in the Isle of Man, number Authorised by the Isle of Man Financial Services Authority. Provider of life assurance and investment products. Authorised by the Insurance Authority of Hong Kong to conduct long-term insurance business in Hong Kong. Registered in the United Arab Emirates as an insurance company (Registration No. 76). Registered with the Ministry of Economy as a foreign company (Registration No. 2013): Registration date 18 April Authorised by the United Arab Emirates Insurance Authority to conduct life assurance and funds accumulation operations. Registered in Singapore No. F06835G. Licensed by the Monetary Authority of Singapore to conduct life insurance business in Singapore. Friends Provident International is a registered trade mark of the Aviva group. FUNDS AIMS TR (52026)