Aviva Investors has announced it will close its Multi-Strategy Target Income fund following “performance challenges” that have made it difficult to keep the fund open.
The fund, which is run by Peter Fitzgerald and Ahmed Behdenna, has £418m in assets under management and is expected to close on September 29.
In a letter to investors, Aviva Investors said that while it had been successful in “limiting volatility and providing income to investors”, the fund's ability to preserve capital at the same time has been challenging.
The fund has experienced significant outflows in recent years - in fact it has only posted two months of positive flows since August 2017 according to Morningstar.
Since that period it has seen £1.3bn of net outflows - with £569m in 2021 so far - and Aviva said there were "additional assets at risk of redemption".
The letter said: "If these assets were also to redeem, this will reduce the fund to a size that Aviva believe will no longer be able to achieve the efficiencies and economies with collective investment schemes.”
On a three-year view, according to Trustnet, the fund returned just 0.8 per cent compared to the IA Targeted Absolute Return sector’s 7.3 per cent average.
Over five years, it lost inventors 2.6 per cent while its sector returned 11.1 per cent.
A spokesperson for Aviva said: “Performance challenges have made it difficult for the fund to gain traction commercially and retain existing clients. Aims Target Return remains a key focus. The fund has always been the key flagship multi-strategy proposition and currently holds £5bn in assets under management, a level that has held fairly stable over the past year.
“We believe there is a strong client and commercial rationale for liquid alternative strategies, both in the discretionary wealth and the pensions market. This decision enables the current portfolio management team to tighten its focus and continue to build on the improved performance Aims Target Return has generated over the last two years.”
This fund closure comes shortly after Aviva Investors made the decision to close its UK property fund over value and liquidity concerns.
Earlier this year in May, the firm told shareholders that a review conducted in the firm’s value assessment determined that it would be in investors’ interests to wind up the fund, alongside its two feeder funds.
sonia.rach@ft.com
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