Aviva Investors has said its AIMS Target Return fund is ahead of its cash +5 per cent annual return target after notching up nearly 2 per cent in its first three months.
The group said the 1.96 per cent return was close to that of global equity markets for the period covering July, August and September but with “a quarter of the volatility”.
When the group’s chief executive Euan Munro announced the launch in July, he said he wanted it to be the “biggest thing” the group does. This inevitably pitches it against Standard Life Investments’ Global Absolute Return Strategies fund, which Mr Munro was instrumental in creating.
On the AIMS fund, the group said the MSCI World index rose 2.3 per cent in the third quarter in sterling terms with a realised volatility of more than 8.8 per cent. The fund’s volatility was less than 2.4 per cent, which the group said was down to sections of the fund which aim to act in different ways.
The fund delivered positive returns in each individual month while global equities only rose in August.
“The reason for this low correlation between the fund’s performance and that of global equity markets is that all three of the portfolio’s buckets (market, risk-reducing, and opportunistic return strategies) contributed positively to overall performance,” the group said.
“What this means is that the fund succeeded in capturing upside performance in its ‘market returns’ section when risky assets prices rose, as they most notably did in August.
“It also managed to cap downside risk in its ‘risk-reducing returns’ section when risk-aversion prevailed, as it did in September.”
The group highlighted its Japanese and German equities positions as positive for the fund, while a long position on the dollar and Australian and Korean government bonds also provided returns when equities sold off.
In its ‘opportunistic returns’ bucket, the group said a short position on the yen against the dollar boosted returns.
It did acknowledge that positions in Brazilian local currency bonds and its Asia ex-Japan equities position detracted from performance.