Managing the fund
A delicate balance
The Aviva Investors Multi-Strategy (AIMS) Target Income Fund uses a diverse range of income-producing strategies to meet income objectives, pay out at regular intervals, and preserve capital. All regardless of how financial markets are performing. All income paid out to investors is derived from income receipts alone, and not from a reduction in the fund's capital.
The freedom to meet objectives
Since the income generated by individual asset classes can fluctuate, building a portfolio to meet these goals is far from straightforward. To address these challenges, we do not benchmark the fund against any market or peer group. This gives managers the freedom to invest when and where they want, with income sources including dividends on equities and real-estate investment trusts, coupons on both government and corporate bonds and option premia.
The three investment strategies
In general, fund managers implement investment strategies that fall into three groups:
1. Market strategies to generate income
Looks at where our analysis of market conditions differs from others as it identifies opportunities that offer greatest value.
- Equities and REITS for dividend income.
- Higher-yielding bonds for coupon payments.
2. Opportunistic strategies to find short-term value
Focuses on identifying opportunities created by the actions of other market participants, such as over-reaction to short-term events.
Example: We write ‘out-of-the-money’ call options on individual equities that the fund already owns in cases where we believe the stock has limited upside potential.
3. Risk-reducing strategies to preserve capital and returns
Aim to add returns in difficult market conditions by seeking to identify strategies that make money if near-term market predictions don’t play out.
Example: ‘Long’ of Australian bonds. As one of the world’s biggest commodity exporters, Australia’s economy is especially sensitive to fortunes elsewhere. Were they to deteriorate, Australian bond prices ought to rise.
The investment process
To gauge the potential risk and reward of various investment ideas, Aviva Investors consider how our views differ from market expectations and, more importantly, why. We stress test them against a range of potential market scenarios, looking to capitalise on opportunities over three-year timeframes.
The five key components of our investment process
- House view. Our view on market outlook, business risk and potential value.
- Idea generation. Identifying suitable investment opportunities in the context of market conditions and Fund goals.
- Idea evaluation. Formulating market, opportunistic and risk reducing strategies. Assessing the strength of individual ideas.
- Portfolio construction. Blending strategies that work well together. Controlling, monitoring and testing strategies to ensure they diversify risk.
- Fund management. Managing the fund, cash flows and liquidity. Monitoring and rebalancing the portfolio.
The information in this document is general in nature and has not been designed to take into account the particular circumstances of any investor or class of investors, their investment objectives or needs. Before making any investment based on any information in this document, recipients should consider the appropriateness of the information having regard to their financial situation, objectives, and needs. Investing in the financial products and or services described in this document is not without significant risk, including the risk of delays in the ability to redeem any investment, the risk of loss of capital invested or income expected to be derived, and share, unit or market price fluctuations. Prospective investors are strongly advised to seek their own financial advice about the merits of any investment.
Any opinions expressed are based on the internal forecasts of Aviva Investors and should not be relied upon as indicating any guarantee or assurance of return from an investment or fund managed by Aviva Investors. No part of this document is intended to constitute advice or a recommendation of any nature. The value of an investment can go down as well as up and can fluctuate in response to changes in the foreign exchange rates of the currencies in which underlying investments are denominated.
Past performance is not a guide to future performance. Performance figures shown are sourced from Aviva Investors unless indicated otherwise, on the pricing and income reinvestment basis stated.
The distribution and offering of shares may be restricted by law in certain jurisdictions. This document is not and should not be taken or construed as a recommendation, solicitation or offer either (i) by anyone in any jurisdiction in which such an offer, recommendation or solicitation is not authorised or (ii) to any person in any jurisdiction to whom it is unlawful to make such an offer, recommendation or solicitation.
You are not authorised to redistribute this document nor qualified to make any offer, representation or contract on behalf of Aviva Investors on the basis of this document.
IMPORTANT INFORMATION SINGAPORE– The Aviva Investors Multi-Strategy Target Return Fund and Aviva Investors Multi-Strategy Target Income Fund (the “Funds”)are registered as restricted schemes in Singapore and can be offered only: (i) to "institutional investors" pursuant to Section 304 of the Securities and Futures Act, Chapter 289 of Singapore (the "Act"), (ii) to "relevant persons" pursuant to Section 305(1) of the Act, (iii) to persons who meet the requirements of an offer made pursuant to Section 305(2) of the Act, or (iv) pursuant to, and in accordance with the conditions of, other applicable exemption provisions of the Act. The Funds are not allowed to be offered to retail investors. Any written material issued in connection with the offer is not a prospectus as defined in the Securities and Futures Act (Chapter 289) of Singapore and, accordingly, statutory liability under the Act in relation to the content of prospectuses would not apply.