Enhancing portfolio resilience with a capital-efficient short-dated fixed income strategy

Credit spreads and short-dated interest rates can be volatile over time, shaping the risk and return dynamics available to investors. As a result, balancing liquidity, capital preservation and return remains a key portfolio challenge.

ReturnPlus is designed with the aim to provide risk-adjusted returns across the market cycle, by capturing high-quality credit spreads from a globally, diversified fixed income portfolio, while limiting exposure to market shocks and unintended risks. The result is a liquid, capital-efficient strategy with enhanced return potential beyond short-dated fixed income, delivered in a distinctive, zero-duration format that is designed to reduce sensitivity to interest rate movements.

The fixed income dilemma: Balancing return, capital and resilience

Today's market environment presents investors with difficult trade-offs.

Moving further along the risk spectrum can improve yield opportunities, but is likely to introduce additional exposure to duration, spread volatility and market uncertainty. Holding excess cash can provide flexibility and liquidity, but may reduce long-term return potential.

For many investors, the challenge is no longer simply finding income. It is finding resilient sources of return that can support portfolio objectives while maintaining flexibility to respond as conditions change.

Cash

Provides liquidity and capital preservation but may limit return potential.

Traditional credit

Can enhance income but introduces exposure to duration and spread risk.

The investor challenge

Balancing return, liquidity, flexibility and risk in an uncertain environment. 

Why ReturnPlus? Potential to enhance portfolio resilience with a capital-efficient, short-dated fixed income strategy

ReturnPlus seeks to bridge the gap between cash allocations and conventional investment-grade credit. 

The strategy accesses diversified opportunities across global fixed income markets, including sovereign, sovereign-related, covered bond and corporate debt exposures. By systematically hedging interest-rate and currency risk, ReturnPlus aims to isolate and access globally diversified credit premia while reducing sources of unwanted volatility. 

Figure 1: A differentiated position on the risk-return spectrum

riskreturn

Note: For illustrative purposes only. Expected return targets may not be achieved due to market conditions and the value of an investment may go up or down. The investor may not get back the original amount invested.

Rather than extending duration or increasing credit risk in pursuit of higher returns, ReturnPlus seeks a more efficient solution: diversified credit spread exposure within a liquid, actively managed framework.  

An approach built around return, efficiency and resilience

Potential for attractive returns

ReturnPlus is designed to capture a diversified range of credit spread opportunities from global short-dated fixed income markets.

The strategy targets returns of SONIA +75 basis points in sterling and ESTR +50 basis points in euros over rolling three-year periods. Targets are not guaranteed and may not be achieved.  

Capital efficiency

The strategy focuses on high-quality credit exposures and seeks to minimise non-credit risks through interest-rate and currency hedging.

This approach can provide particular benefits for investors operating within capital-sensitive frameworks, including insurers subject to risk-based capital requirements.  

Resilience

ReturnPlus invests in highly liquid instruments and is designed to withstand shocks, capitalise on dislocations and aims to provide stable returns over the market cycle. 

With daily liquidity and short settlement periods, the strategy can support both strategic allocations and evolving portfolio needs.  

Relevant for insurance portfolios. Relevant far beyond them.

The origins of ReturnPlus lie in managing insurance balance sheets. 

For decades, Aviva Investors has helped insurers balance liquidity, capital efficiency and portfolio return objectives. This experience shaped the development of ReturnPlus and its focus on resilience, risk discipline and capital efficiency. 

Today, insurers continue to be important users of the strategy. At the same time, pension schemes and other investors increasingly utilise ReturnPlus as a source of diversified spread exposure and strategic cash enhancement.  

£32bn

Liquidity assets managed*

Less than 1%

Annualised volatility since inception**

Global opportunity set

Multi-currency implementation

Specialist capabilities

Specialist liquidity, fixed income and insurance solutions teams 

*Source: Aviva Investors, as at 30 June 2026

**Past performance is not a reliable indicator of future returns. Inception date for GBP is October 31, 2014, EUR 12 March, 2020 and USD 7 July, 2025.

Different investors. Different objectives.

ReturnPlus supports a variety of portfolio objectives across insurance and pension portfolios. 

How insurers use ReturnPlus

Insurers are balancing return, capital efficiency and liquidity in an increasingly volatile market environment. ReturnPlus can support a range of investment objectives.

Strategic cash optimisation

Typical use case: Strategic cash allocations 

Many insurers hold capital in cash or cash-equivalent strategies to meet future obligations and liquidity requirements. ReturnPlus may help generate additional return from strategic cash holdings while maintaining strong liquidity characteristics and a focus on capital preservation. 

Return on capital

Typical use case: Backing non-annuity liabilities 

ReturnPlus provides diversified sources of credit spread exposure while seeking to contain interest-rate risk through its portfolio construction. This may help insurers improve return on capital while supporting broader balance-sheet objectives. 

Fixed income optimisation

Typical use case: Core fixed income portfolios

ReturnPlus can complement sovereign and investment-grade short-dated credit allocations by providing access to diversified sources of spread income, helping improve portfolio efficiency whilst maintaining liquidity. 

How pension schemes use ReturnPlus

Pension schemes are increasingly looking for diversified sources of return that sit between traditional liability-driven investments and buy-and-maintain credit allocations. 

 

Diversified spread exposure

Typical use case: Cashflow-driven investment portfolios 

ReturnPlus can provide pension schemes with an additional source of diversified credit spread exposure, complementing traditional fixed income allocations whilst maintaining a focus on liquidity and risk management. 

LDI complement

Typical use case: Liability-aware portfolio construction 

Positioned between liability-driven investment strategies and buy-and-maintain credit allocations, ReturnPlus can help schemes diversify sources of return whilst remaining aligned with broader liability management objectives. 

Endgame positioning

Typical use case: Improving portfolio efficiency as funding levels improve 

As schemes progress towards endgame objectives, ReturnPlus can provide a flexible source of spread income that supports portfolio returns without significantly increasing risk, helping schemes maintain flexibility as objectives evolve. 

In conversation with Insurance Asset Management: Why insurers are turning to Aviva Investors ReturnPlus

In partnership with IAM, Todd Cutting and Mike Leonard discuss Aviva Investors' ReturnPlus strategy and its potential benefits for insurers. Our short video explores the strategy's key features and explains how it can provide flexibility, improve return on capital and remove interest rate risk.

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Transcript  for video #

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Built to navigate changing market environments

Market stress can expose weaknesses in traditional liquidity strategies. 

ReturnPlus was developed with a focus on maintaining liquidity and managing downside risks through diversified sources of spread exposure and disciplined risk management. 

During the UK gilt market disruption in 2022, the strategy demonstrated resilience while many traditional yield-enhancement assets faced significant volatility. The diversified nature of the portfolio and access to multiple global liquidity sources helped support implementation throughout the period. 

Figure 2: Performance comparison during the 2022 gilt crisis

Past performance is not a reliable indicator of future returns. Illustration shown net of fees for the Aviva ReturnPlus strategy. 

Note: Indexed to 100, data from May 31 to December 31, 2022. Indices used: Aviva ReturnPlus Strategy; Global asset-backed securities: Bloomberg Global Aggregate Asset Backed TR Index Hedged GBP; Global corporates: Bloomberg Global Aggregate Corporate TR Index Hedged GBP; Euro corporates: Bloomberg Euro Aggregate Corporates TR Index Value Hedged GBP.

Aviva Investors, Bloomberg. Data as of September 2024.

A long-term track record

Since its inception, ReturnPlus has aimed to deliver enhanced returns above cash while maintaining a focus on liquidity and capital preservation.

The strategy has developed a long-term track record through a range of market environments, demonstrating its ability to access diversified sources of return while maintaining relatively low levels of volatility. 

Strategy inception

GBP: October 2014
EUR: March 2020
USD: July 2025

 

Target

SONIA1 +75bps (GBP) ESTR2 +50bps (EUR) SOFR3 +75bps (USD) 

Settlement

T+3 (ReturnPlus GBP/EUR) | T+2 (ReturnPlus USD) 

Liquidity

Daily dealing

Credit quality

Minimum AA- rated for non-government exposures

Minimum A-rated otherwise

Past performance is not a reliable guide to future performance. Note: bps = basis points. Source: Aviva Investors, as at 30 June 2026.

1 GBP Strategy benchmark is SONIA: Sterling Overnight Index Average Rate.

2 EUR Strategy benchmark is ESTR: Euro Short Term Rate.

3 USD Strategy benchmark is SOFR: Secured Overnight Finance Rate.

Strategy literature

Whitepaper: The case for ReturnPlus

PDF 743.1 KB 14 pages

A detailed examination of the strategy's approach to returns, capital efficiency and liquidity.

Download

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Key risks of ReturnPlus strategy

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.

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.

ReturnPlus team

Meet our ReturnPlus team.

  • Iain Forrester

    Head of Fixed Income Solutions

  • Todd Cutting

    Head of Enhanced Liquidity and ReturnPlus

  • Alastair Sewell

    Senior Investment Director

  • Michael Leonard

    Head of Insurance Solutions

  • Alexander Ieri

    Portfolio Manager

    • Looking for a different approach to liquidity and fixed income?

    Discover how ReturnPlus seeks to help insurers, pension schemes and other investors to access diversified credit premia whilst maintaining a strong focus on liquidity, flexibility and capital preservation. 

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