Aviva Investors is to cap costs and abandon absolute volatility limits on its £2.2bn risk-rated multi-asset range after deciding its existing approach had become “less relevant”.
The five funds, currently managed with reference to absolute levels of volatility, will instead focus on levels relative to markets as of November 22. Lowest-risk offering Multi Asset I, for example, will target 20 per cent of global equity volatility as opposed to an overall volatility limit of 5 per cent.
Amid a greater focus on cost from buyers, charges for the individual portfolios will be capped at 0.6 per cent in a bid to provide “clarity” to investors, the firm said.
Volatility, as measured by indices such as the Vix, has dropped to fresh lows this year despite persistent geopolitical concerns. In a note to intermediaries, Aviva Investors chief operating officer for UK retail Iain Buckle said: “We recognise absolute volatility limits are less relevant than they used to be.
“From now on, the risk management of the range will be described in relative terms and aligned to global equity market volatility. This allows us to continue to ensure the funds consistently stay within their risk profiles.”
Aviva has also strengthened its multi-asset team with a pair of hires. Harriet Reeves has joined from hedge fund Comac Capital as global market strategist, while Iain MacCormick, latterly of Standard Life Investments, has been made responsible for implementing the team’s trades.