Aviva Passive Plus Funds deliver on target on 1st Anniversary

“As we reach the 1st anniversary of the launch of our Passive Plus Fund range, I’m delighted to say that the funds have performed in line with expectations.”

Amber Gleeson, Investment Specialist with Aviva Investors, discusses the types of clients that may find the Aviva Multi-Asset ESG Passive Plus fund range a suitable investment.

Today’s investor is looking for a multi-asset fund that is risk profiled, offers a diversified exposure with the prospect of competitive returns, and has a focus on environmental, social and governance (ESG) considerations – all of which should be available at a lower cost. Passive Plus is constructed to meet these needs while focusing its asset allocation on the long term rather than trying to time markets, making this fund appealing to a broad range of investors.

There are five key client types who may find Passive Plus an attractive addition to their portfolios.

Client A: The cost-focused investor

With more transparency around charges, performance, and the range of products available, investors can move quickly should they perceive a fund to be underperforming, uncompetitively priced, or both.

Whilst investors in any of the Passive Plus range get the benefits of risk profiling, a global asset allocation approach and ESG uplift, we use predominantly passive building blocks to keep the ongoing charges as low as possible.

Compounding is a powerful force in the world of investing and costs can really eat into your return. Keeping costs down can help clients achieve their long-term goals and that is why we have priced the fund range at 0.05% less than our standard fee rate.

Client B: The ESG-conscious investor

ESG awareness continues to grow among investors. There are those that want ‘dark green’ products that closely match their values. But there are plenty of investors who are mindful of big issues like climate change, but still want to have a broad and well-diversified solution that doesn’t venture too far away from the index.

We have a track record in responsible investing that stretches back more than five decades and our Passive Plus range aims to meet the needs of investors who want a simple solution with an enhanced ESG profile.

Our approach to delivering this enhanced ESG is threefold: 1) engage and improve.; 2) avoid certain areas; 3) invest in higher ESG ratings;

• Engage and improve: we hold the companies we own to account through ongoing engagement and active voting at company AGMs (although we may decide to exit an investment if a firm refuses to engage or improve). We also work hard to make an impact on economies and society more broadly by seeking to influence policymakers and regulators to create more sustainable financial markets. We call this practice macro stewardship.
• Avoid certain areas: the Passive Plus range applies the Aviva Investors baseline exclusions policy, which removes exposures to areas such as controversial weapons, thermal coal, Arctic oil, oil sands and tobacco.
• Investing in higher ESG ratings: Passive Plus aims to deliver an ESG uplift, by tilting the portfolio towards better-scoring ESG companies and countries, while maintaining a similar risk-return profile to the index.

Client C: The investor with a core-satellite approach

Some clients want more discretion over what they invest in and want part of their portfolio in adventurous selections. To enable this, advisers build a ‘core-satellite’ approach, using a simple foundation solution to help anchor to a particular risk profile and complement it with a higher-risk or alternative solution.

We believe Passive Plus could be this foundation solution in a blended portfolio, acting as a base for more adventurous funds to be added in. As a comparatively low-cost and simple solution, Passive Plus can be mixed with standard priced funds to keep overall costs down while still offering the potential of competitive returns and diversification.

Client D: The globally minded investor

Some investors want a more diversified investment solution than one narrowly focused by asset class or geography. As such, a product that benefits from a truly global asset allocation approach across a broad range of asset classes could meet that need. The key point of differentiation is the global approach which we believe makes more sense from a diversification perspective.

Client E: The investor who wants predictability

Some investors just want to keep things simple. They could be a younger client new to investing or someone with a modest pot that doesn’t want their portfolio to become overly complicated with too many funds. To these clients, Passive Plus could be seen as a one-stop solution that offers diversified exposure, ESG built in, and the opportunity to pick a fund that matches their particular risk appetite.

It is also more straightforward for advisers to explain the fund structure and performance. The allocations are well established, and the different building blocks deliver returns similar to a market index, meaning it can be easier for the adviser to set expectations of how the fund may perform and make performance reviews easier.

Ticking all the boxes

There are a lot of boxes to be ticked to meet the varying needs of investors, but this is exactly what our Passive Plus range was designed to do.

With Aviva Investors’ four decades of experience managing multi-asset funds, a well-resourced team of over 45 dedicated professionals, and the know how that comes with managing around €111 billion in multi-asset portfolios, we believe Passive Plus offers a compelling solution for a broad range of clients.

Warning: Past performance is not a reliable guide to future performance.
Warning: The value of your investment may go down as well as up.
Warning: If you invest in this fund you may lose some or all the money you invest.
Warning: These funds may be affected by changes in currency exchange rates.