Aviva has launched a set of risk-rated governed portfolios, to be managed by Morningstar, in a bid to offer quality funds within “cost constraints” to users of its adviser platform.
The five portfolios, which rank from 3 to 7 on Distribution Technology’s risk rating scale, will have ongoing charges figures capped at 0.5 per cent and predominantly use passive funds.
Dan Kemp, Morningstar’s head of investment consulting and portfolio management, EMEA, said active funds would only be used where they could add value, or where passive offerings were not widely available.
This includes areas such as UK small-cap equities, where the range will use a River & Mercantile fund, and the high-yield bond space, where a Kames Capital fund will be used.
Mr Kemp noted that the portfolios - whose fees remain in excess of those charged by rival services such as Vanguard’s LifeStrategy funds - were not aiming to be “as cheap as possible”.
“We wanted a balance between the cost side and the quality side,” he said. “This is different because of the ability to pick third-party managers and the fact we don’t just use passives.”
The initial set of portfolios all aim to deliver growth objectives. An income product is to be added to the range later this year.