AvivaJan 3 2019

Aviva admits fund performance blunder

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Aviva admits fund performance blunder

The factsheet with performance data for a £109m Aviva investors fund was not available for advisers to view online for two weeks.

The Aviva Smooth Managed fund, which according to the promotional material aims to "smooth" returns over a period of time in order to protect investors from short term market movements.

One feature of the fund is that it adjusts the unit price of the fund when the value of the underlying investments rises or falls.

The sharp market sell-off witnessed at the end of 2018 made such an adjustment, a fall of 5 per cent in the unit price.

This adjustment happened on 19 December.

But Aviva made an error in updating the factsheet, which carries daily performance data, on that date, with the performance of the fund, according to the factsheet, looking better than the reality for a period of hours on that date, before the error was discovered, and the fund factsheet was removed, and not made available to investors again until 2 January.

The error meant that the performance of the fund on its one-year anniversary was recorded as being a gain of 4.9 per cent, while the number should have been a loss.

A spokesman for Aviva said the 5 per cent fall in the value of the fund compares favourably over the past year with the fall in value of other assets.

The company's spokesman added that the price adjustment mechanisms are revealed in the fund literature.

FTAdviser understands that Aviva is examining ways in which it can be more proactive in its communications around this fund.  

Minesh Patel, an adviser at EA Financial Solutions in London said: "I do not use this fund.

"This type of fund is going to come to prominence with markets falling and clients looking for a path of investments which is less volatile. I am not a fan of these type of structures, which are very akin to with profits funds."

david.thorpe@ft.com