Senior ABS Income

Our Senior ABS Income strategy can play both a strategic and tactical role within portfolios. We invest globally across the full spectrum of ABS and collateralised loan obligation (CLO) markets to capture attractive spreads and build well‑diversified portfolios with low correlation to traditional fixed income.

Backed by an experienced portfolio management team, our approach combines top-down strategic insight, deep understanding of underlying collateral and AI-driven analysis - supported by close collaboration across our fixed income platform. Together, this disciplined framework aims to deliver resilient and consistent outcomes for clients across market cycles.

Investment thinking that brings together the collective insight of Aviva Investors’ teams from across the globe on the key themes influencing markets.

For further information on the risks and risk profiles of our funds, please refer to the relevant KIID and Prospectus.

Investment risk & currency 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.  

Counterparty risk: The strategy could lose money if an entity with which it does business becomes unwilling or is unable to meet its obligations to the strategy.  

Liquidity risk: Some investments could be hard to value or to sell at a desired time, or at a price considered to be fair (especially in large quantities). As a result their prices can be volatile.  

Derivatives risk: Investments can be made in derivatives, which can be complex and highly volatile. Derivatives may not perform as expected, meaning significant losses may be incurred. Derivatives are instruments that can be complex and highly volatile, have some degree of unpredictability (especially in unusual market conditions), and can create losses significantly greater than the cost of the derivative itself.  

Emerging markets risk: Investments can be made in emerging markets. These markets may be volatile and carry higher risk than developed markets. 

Credit and interest rate risk: Bond values are affected by changes in interest rates and the bond issuer's creditworthiness. Bonds that offer the potential for a higher income typically have a greater risk of default.  

Illiquid securities risk: Some investments could be hard to value or to sell at a desired time, or at a price considered to be fair (especially in large quantities), and as a result their prices can be volatile. 

Market risk: Prices of many securities (including bonds, equities and derivatives) change continuously, and can at times fall rapidly and unpredictably. 

Mortgage-backed and asset-backed securities risk: Mortgage-backed and asset-backed securities (MBS/ABS) are subject to interest rate, prepayment, credit, valuation and liquidity risks. Payments of interest and principal may be made earlier or later than expected due to voluntary prepayments, refinancing or defaults, which may reduce returns and require reinvestment at less favourable yields. Changes in interest rates may increase the duration and volatility of these securities, and their market value may decline in both rising and falling rate environments. Securities backed by sub-prime loans, as well as interest-only or principal-only tranches, are particularly sensitive to changes in interest rates and repayment speeds and may experience significant losses, including a total loss of investment. The market for certain mortgage-backed and asset-backed securities may be limited, which may adversely affect valuation and liquidity. 

Collateralised loan obligation risk: Collateralised loan/debt obligations (CLOs/CDOs) are similar to ABS/MBS type of securities. The main difference being the nature of the collateral pool, which is not constituted of debt securities or mortgages but rather leveraged loans issued by corporates. In addition to the normal risks associated with debt securities and asset-backed securities (e.g., interest rate risk, credit risk and default risk), CDOs and CLOs carry additional risks including, but not limited to:

(i) the possibility that distributions from collateral securities will not be adequate to make interest or other payments;  

(ii) the quality of the collateral may decline in value or quality or go into default or be downgraded;  

(iii) a fund may invest in tranches of a CDO or CLO that are subordinate to other classes; and  

(iv) the complex structure of the security may not be fully understood at the time of investment and may produce disputes with the issuer, difficulty in valuing the security or unexpected investment results. The secondary market for CLOs may not be as liquid as the secondary market for corporate debt. As a result, the investment manager could find it more difficult to sell these investments or may be able to sell them only at prices lower than if they were widely traded.