Product review: Aviva Investors US Equity Income fund II

Aviva Investors is to launch a successor to its US Equity Income fund, which is due to soft close in early October. The Aviva Investors US Equity Income fund II will be launched in September using the same strategy.

Aviva Investors says the soft closure of the original fund is to protect the interests of current investors and ensure the fund can continue to be managed in accordance with its investment strategy.

To be managed by Henry W Sanders III and Thomas S. Forsha from Aviva’s equity subsidiary River Road Asset Management, it will invest in equity securities listed on North American exchanges with a minimum market capitalisation of $1bn.

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The fund will aim to deliver a dividend yield 1.5 per cent greater than the Russell 3000 Value index, which it will be benchmarked against.

The annual management charge (AMC) for the RDR share class will be 0.75 per cent.

The original fund’s current minimum investment is a £500 lump sum and £50 monthly savings.


US funds are becoming increasingly popular with investors looking to widen their portfolios geographically and look for income at the same time.

The demand for this particular fund’s strategy is clear, and Aviva Investors is doing the right thing in starting afresh to protect its current investors.

Although the fund is not as large as some others – it currently sits at £366m – it is wise to slow inflows before it gets too big. But this action begs the question: why don’t more groups do the same? Aviva Investors says the reason to soft close the original fund was to maintain its size and strategy. The fund would have perhaps become unsustainable if it got too big.

Although as it is not as big as many other funds which are into the £1bn-plus mark, it does seem strange to soft close it at this current time.

Investors should note the new fund will not be an exact mirror - one change is that it will have a greater large-cap bias than its predecessor and will be less constrained while aiming to offer lower volatility.