Aviva Investors launches AIMS Fixed Income Fund in Australia

Dan James

Dan James

Aviva Investors, the global asset management business of Aviva plc, has extended the Aviva Investors Multi-Strategy (AIMS) range in Australia with the launch of the AIMS Fixed Income Fund1.

The AIMS Fixed Income Fund takes an unconstrained approach to investing, utilising the global fixed income universe to deliver steady capital growth for clients. The Fund aims to achieve a 3% per annum gross return above the Reserve Bank of Australia (RBA) cash rate (before charges) over any rolling three-year period.

In a low yield environment, investors need to question whether they are being adequately compensated for the risks they assume. The Fund selects investments on merit, constructing portfolios with an emphasis on absolute risk-adjusted returns rather than a benchmark-relative approach, and broadens the opportunity set through the use of derivatives. The Fund invests in a diversified portfolio of between 25-35 strategies, constructed into three categories: market strategies, opportunistic strategies and risk-reducing strategies.

The Fund is managed by: Dan James, Global Head of Fixed Income; James McAlevey, Senior Portfolio Manager; Orla Garvey, Senior Portfolio Manager; and Joubeen Hurren, Senior Portfolio Manager; with the full support from the Global Fixed Income Team and the broad investment resources of Aviva Investors globally.

Dan James, Co-Manager and Global Head of Fixed Income, Aviva Investors, said: “Falling interest rates over the last 25 years have created a tailwind for fixed income returns, which is unlikely to be repeated in the next five to 10 years. By taking an unconstrained and diversified approach, the AIMS Fixed Income Fund has the flexibility to ensure risk is adequately rewarded. Recent volatility supports the need for unconstrained approaches that can achieve their investment objectives regardless of the market conditions.”

Brett Jackson, Managing Director, Australia, Aviva Investors, said: “We have had a positive response from the Australian market, and I am very pleased that one large global institution will be seeding the new Australian AIMS Fixed Income Fund with AU$225 million over the next few weeks. While fixed income funds are generally based on two risk factors, duration and spread, our fund is uniquely positioned, relying on six risk factors: duration, spread, curve, volatility, currency and inflation.

The Fund also seeks to exclude investments in companies that manufacture weapons, tobacco products or do significant damage to the environment and society generally. Our Global Responsible Investment team in London will govern, maintain and update the Fund’s responsible investment characteristics. There are very few absolute return bond funds that have these exclusions, but I believe there will be more demand for them in future.”

Key Risks

The value of an investment and any income from it can go down as well as up.   Investors may not get back the original amount invested.

Contingent convertible securities (coco bonds) are complex, their income may be cancelled or suspended, they are more vulnerable to losses than equities and they can be highly volatile.

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.

The Fund uses derivatives; these can be complex and highly volatile. This means in unusual market conditions the Fund may suffer significant losses.

Certain assets held in the Fund 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 could be very volatile

1 The AIMS Fixed Income Fund operates as a ‘feeder’ fund of the underlying fund, the Aviva Investors Multi-Strategy Fixed Income Fund, a sub-fund of Aviva Investors SICAV.

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