Aviva Investors has secured a deal to manage £121m of assets, offloaded from Standard Life Investments’ Global Absolute Return Strategies (Gars) fund
The group confirmed that a portion of the £26.4bn Gars fund will be managed by former Standard Life executive Euan Munro, who was the brains behind Gars, as part of his Aviva Investors Multi Strategy (Aims) fund.
After joining Aviva as chief executive at the start of 2014, Mr Munro announced his plan to create the Aims fund to try to replicate the success of Gars.
Last Thursday (22 September), the decision was made by Surrey County Council to divest its pension scheme's holding in Gars, which amounts to £170.6m in assets.
The remaining £49.6m in assets will be managed by Ruffer Investment Management.
A spokesman from Aviva confirmed the money had been moved across to the Aims fund.
Gars has faced a tricky time of late, losing 2.4 per cent over the past year, against the IA Targeted Absolute Return sector, which has returned 1.2 per cent.
Standard Life Investments admitted the returns from the Gars fund had fallen short of the level it expected over the long term.
However, the company was confident Gars’ returns will improve, largely blaming market conditions, central bank action, and investors’ “short-termism” on the hindered performance of the fund.
“The series of events that unfolded during the past 12 months differed greatly from our central view, and in fact resembled a combination of the ‘tail-risk’ events for which we stress-test the portfolio.
“In that respect, GARS performed in-line with our expectations. This tells us that risk management and diversification remain sound, with negative returns deriving instead from an unusual and extreme set of market circumstances.”
According to the note, the fund managers are paying close attention to changing economic “fundamentals”, responding through the vehicle’s investment process and philosophy.
“This has led us to make subtle but material alterations to the Gars portfolio throughout its history, including in recent months.
“We are confident these changes will ensure Gars performs well in this uncertain environment.”
