If you’re interested in technology, it might be the personal computer, smartphone or birth of the internet. If sport is your thing, you might have in mind the 1970s Dutch football team, pioneers of “Total Football”, or Dick Fosbury, who in 1968 revolutionised the high jump with a new technique that still bears his name. Or, more recently, why not Simone Biles, a gymnast so far ahead of the competition, the sport’s governing body had to add a new letter on the difficulty scale to reflect her brilliance.
But when it comes to the world of investment, what or who springs to mind? Some might reasonably point to the explosion of passive investing over the past decade or so, but while it has undoubtedly been disruptive, the case for innovation is less clear cut.
MAF Core: disruptive and innovative
The term “disruptive innovation” was coined almost 30 years ago by a Harvard Business School professor and business consultant, Clayton Christensen. For Christensen, who The Economist described as “the most influential management thinker of his time”, the term is not about a new, breakthrough innovation. Instead, it refers to the transformation of existing products with the intention of making them more affordable and accessible to a wider population.
We wanted to deliver a suite of products that could provide diversification, resilience, ESG, and long-term growth – but without the excessive fees.
And that, in a nutshell, is exactly what we set out to do three years ago when we launched our MAF Core range of multi-asset strategies. We wanted to deliver a suite of products that could provide diversification, resilience, ESG integration, and long-term growth – but without the excessive fees that cut deeply into investors’ savings or pension pots.
Before then, investors essentially had two choices – pay up to put their money with a manager that used a sophisticated, active approach to asset allocation, risk and ESG integration, or pay less for a simple, passive solution without any add-ons. There was nothing in between that offered the ideal blend of investment expertise, prospect of competitive risk-adjusted returns, ESG integration and, crucially, value for money.
Asset allocation and ESG: experience and expertise
On the expertise point, we knew we could tick that box. We have been managing multi-asset portfolios for over four decades, have a dedicated team of 45 professionals and can draw on the insights and expertise of Aviva Investors’ capabilities across geographies and asset classes. Currently, we run over £90 billion in multi-asset portfolios for Aviva, one of the UK’s largest pension providers, and external clients.
Instead of outsourcing asset allocation to a peer-group benchmark or third-party provider, like some competitors do, our framework is designed in-house by a large and dedicated global team with decades of experience.
We offer our clients access to assets you wouldn’t typically find in cheaper multi-asset solutions.
To ensure our MAF Core funds have the appropriate level of diversification and help in our aim to enhance risk-adjusted returns, we offer our clients access to assets you wouldn’t typically find in cheaper multi-asset solutions. Take fixed income, for example, where our MAF Core funds offer exposure to areas like high yield and emerging-market debt – as these are less-common parts of the market, we use active strategies where we believe there is a better opportunity to generate higher returns.
Just like our active MAF Plus range, the five funds in the MAF Core range benefit from risk profiling. As you move from MAF Core I (the lowest-risk fund) to MAF Core V (the highest-risk fund), the allocation to growth assets goes up and the allocation to defensive assets goes down.
On ESG, we have a proven track record in responsible investing that goes back decades. We believe focusing on a company’s short-term performance while disregarding factors such as its quality of governance, treatment of staff and record on climate change is misguided. That’s why our MAF Core funds seek to invest in companies and countries with a stronger ESG score than the underlying markets by tilting global equity and sovereign bond investments towards higher ESG-rated securities. As well as tilting, we also apply our firm-level responsible investment policies.1
We are proud to have performed very well compared to both lower-cost and higher-cost competitors.
Value for money
Last, but not least, in our efforts to deliver value to our investors, the MAF Core range uses passive building blocks to keep costs down, with the ongoing charges figure capped at 0.15 per cent - what was and still is one of the lowest-cost multi-asset solutions available in the UK market.
We are proud that the combination of competitive pricing, our heritage in multi-asset investing, robust processes and ESG expertise resulted in the MAF Core range securing ratings from research houses RSMR, Square Mile and Defaqto ahead of the critical three-year anniversary milestone. On assigning MAF Core its “Positive Prospect” rating, Square Mile noted:
“The combination of low-cost and ESG integration differentiates this range from many competitors. AI's strategic asset allocation framework is robust and has been honed over the years from their heritage within the insurance space. Notable on this range, and unlike some peers, they do not have a UK bias. This means the portfolio will benefit from stronger growth within international markets compared to the UK.”
Just as Johan Cruyff, Dick Fosbury and Simone Biles transformed the world of sports and raised the bar on what is possible, that is exactly what we want to do for multi-asset investors with MAF Core. An ambitious goal for sure, but nobody shakes up the market by thinking small.
*Tilts are applied for global equities and sovereigns in the portfolio to achieve a higher ESG score than the respective benchmarks (MSCI World Index & Bloomberg Global Aggregate Treasuries Index). Global equities also tilt towards companies with lower carbon intensity than the benchmark.
Key risks
For further information on the risks and risk profiles of our funds, please refer to the relevant KIID and Prospectus.
Investment risk
The value of an investment and any income from it can go down as well as up and can fluctuate in response to changes in currency and exchange rates. Investors may not get back the original amount invested.
Emerging markets risk
The funds invest in emerging markets; these markets may be volatile and carry higher risk than developed markets.
Derivatives risk
The funds use derivatives; these can be complex and highly volatile. Derivatives may not perform as expected, which means the funds may suffer significant losses.
