The beauty of funds which invest in a range of asset classes like this one is that they should deliver a smoother investment journey than their single asset class counterparts. This fund also benefits from being able to invest in any part of the world.
With the strapline “because no-one can predict the future” the Aviva Investors Multi-Strategy Target Return Fund aims to deliver a return of cash + 5% regardless of the vagaries of the market. It features on our Select 50 list of preferred funds.
The team at Aviva makes much of understanding its clients and building solutions that respond to these needs.
“The one thing we can predict is that the markets can be unpredictable,” the managers observe.
“Our aim is to develop strategies for the fund that will perform well in a variety of market conditions.”
The investors focus on three groups in their investment thinking: market strategies, opportunistic strategies and risk reducing strategies.
Market strategies are where they own an asset outright, such as holding equities or bonds.
“We might believe the US is entering a period of economic growth earlier than the market pricing currently suggests. In this instance we may look to capitalise on this by buying equities or a particular equity index like the S&P 500,” the managers say.
Opportunistic strategies are strategies not necessarily dependent on the direction of underlying asset classes, meaning they can generate returns that are uncorrelated to markets.
“These opportunities can be created by the intervention of market participants who may not always seek to maximise profit (e.g. central banks) or arise as a result of market panics,” says the team.
Risk-reducing strategies aim to deliver positive returns when markets sell off, become stressed or otherwise do not behave as the team anticipates in the central outlook of the house view.
As well as trying to target a particular return, the investment team is mindful of risk, aiming to manage the fund in a way that delivers the performance objective, with less than 50% of the volatility of global equities.
Selling points of the fund include its freedom from benchmarks and its ability to work across asset boundaries.
The team’s multi-strategy approach can be split out into four broad stages:
1. First the analysts identify ideas
2. Then they decide how to apply those ideas
3. Next they work out how to implement the ideas, including which types of investments to use
4. At the end of the process they blend strategies together so they complement and balance each other
Heading up the investment team at Aviva is Euan Monro and the lead portfolio managers on the fund are Peter Fitzgerald, Dan James, Ian Pizer and Brendan Walsh.
The team meets monthly to discuss new ideas as well as having a quarterly meeting to review all portfolio positions.
In addition to the portfolio management team, which makes the ultimate decisions regarding the portfolio, there are portfolio construction and risk teams which inform the process and stimulate debate.
Current portfolio trades include China's continuing prioritisation of growth - expressed by positions in emerging market mid-cap equities. The managers believe that reflation is underestimated by markets and with a nod to this they are long US inflation.
The managers believe that the cyclical recovery is extending globally. To this end they are keen on European equities and a number of resources stocks.
The managers are also keen on the theme of the domestic US economy supported by Trump’s policy initiatives. For this reason they are positive on US equities as well as US high-yield bonds.
Claire Dwyer is a senior manager in Fidelity’s Personal Investing business. Prior to this she worked at Cambridge Associates and Mondrian Investment Partners. She is a chartered alternative investment analyst.
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The value of investments and the income from them can go down as well as up and investors may not get back the amount invested. When investing in overseas markets, changes in currency exchange rates may affect the value of your investment. The Select 50 is not a recommendation to buy or sell a fund. This information does not constitute investment advice and should not be used as the basis for any investment decision nor should it be treated as a recommendation for any investment. Investors should also note that the views expressed may no longer be current and may have already been acted upon. Fidelity Personal Investing does not give personal recommendations. If you are unsure about the suitability of an investment, you should speak to an authorised financial adviser.