Taking responsibility to new levels Aviva Investors ESG Capabilities & AIMS Multi-Strategy Target Return Fund This document is for professional clients, institutional/qualified investors and advisors only. It is not to be distributed to or relied on by retail clients. Aviva Investors: Public
Combining our expertise for your outcomes 320 years in business | 33m customers Life insurance General insurance Investments, savings and retirement Asset class £bn Credit 119.7 Equities 36.2 £356bn Multi-asset and macro 80.4 Real assets 46.1 14 1500+ managed across asset classes Solutions 73.7 countries people Total 356.1 Source: Aviva Investors and Aviva plc as at 30 September 2019. Aviva Investors is the name under which a number of globally integrated asset management businesses operate. Aviva Investors Global Services Limited is our main investment arm ultimately 100% owned by Aviva plc (a multinational financial services company). ). The AUM figures shown above are for the group of companies, trading as Aviva Investors, the fund management arm of the Aviva Group. Please note individual componentry of Real Assets may not reflect the overall Real Assets AUM which reflects components managed within Fixed Income across Multi-Asset & Macro and Credit, and methodical treatment of nominal versus market value in illiquid assets. 2 Aviva Investors: Public
The value of low volatility Downside protection is key in maximising compounding of Lower volatility due to enhanced returns diversification reduces: Value High volatility Sequencing risk – early poor • Low volatility returns can lower the value of a Panic portfolio in the long term Problematic behavioural traits – • “time in the market not timing the market” Time Source: Aviva Investors, for illustrative purposes only 3 Aviva Investors: Public
Key strengths Connected thinking Collaborative, firm-wide investment approach Responsibility built in Environmental, Social and Governance considerations improve outcomes Robust portfolio Focus on protecting capital through difficult periods construction Source: Aviva Investors 4 Aviva Investors: Public
Aiming to meet your clients’ needs Your clients’ needs AIMS Target Return Capital growth over the long term Performance objective: cash + 5% p.a. 1 Less than 50% Minimise volatility of the volatility of global equities 2 Low correlation with equities Enhanced diversification 1. Cash is defined as the European Central Bank Deposit Facility Rate, which banks may use to make overnight deposits with the Eurosystem. Prior to 28 February 2019 the ECB Rate used for comparative purposes may have been the European Central Bank Re-Financing Rate, when it should have been the European Central Bank Deposit Facility Rate. This did not have any impact on fund performance and was used for illustrative, relative return purposes only. Objective is measured over a 3-year rolling period. For the Australian domiciled $AUD Hedged AIMS Target Return Fund Cash is defined as the RBA Cash Rate and for the AIMS Target Return Fund $NZD Hedged SICAV sub-fund Cash is defined as the RBNZ Cash Rate. 2. Global equities benchmarked by MSCI All Country World index. The value of an investment may go down as well as up and the investor may not get back the original amount invested. 5 Aviva Investors: Public
AIMS investment process Creating an inventory of approved ideas Constructing a robust diversified portfolio Global collaboration in idea generation Dedicated AIMS team managing portfolio Idea House Idea Idea Portfolio Implementation Position Evaluation Selection View Generation Construction & Risk monitoring Evaluation of ideas Active engagement on GRI* Team participation Thematic research against ESG Voting on all holdings – behalf of investors; in quarterly meetings & generation of considerations at active & passive exclusions & House View ESG-related ideas SIG meetings where necessary Responsibility built-in Source: Aviva Investors, * Global Responsible Investment Team. Please note there is no specific ESG restriction on the Investmen t Manager’s decision. 6 Aviva Investors: Public
Robust portfolio construction: building blocks What we aim to provide MARKET RETURNS • Bespoke risk premia strategies • 35-65% risk OPPORTUNISTIC RETURNS • Idiosyncratic investment themes • 10-45% risk RISK-REDUCING RETURNS • Protect the portfolio in times of market stress • 10-45% risk Source: Aviva Investors 7 Aviva Investors: Public
Connected Thinking Aviva Investors: Public
Connected thinking maximises our resources AIMS AIMS 7 Portfolio managers 57 Long-only Rates 19 years average industry experience Multi-Asset Economists & strategists Multi-asset and Macro Strategy & EMD Economics Implemen- tation team 45 54 20 183 65 Equities ESG Real Assets Solutions Credit Source: Aviva Investors as at 31 December 2019. Equities headcount includes the REITs and Japan equities teams as well as 1 outstanding hire in each of the US and Global equities teams. Poland equities excluded. 9 Aviva Investors: Public
Connected thinking & responsibility built-in in action: Building Efficiency Building efficiency is a key mechanism in addressing • climate change Long basket • 10 stocks - Average AHA score: 6.7 • LED producers • Heating, Ventilation & Air Conditioning • Building materials • Energy management & industrial • automation Short basket • 20 stocks - Average AHA score: 4.7 • Electronic components • Industrial machinery • Aerospace & Defence • Building products • Building Efficiency - Style Skyline Source: Aviva Investors as at 6th January 2020. Position example for illustrative purposes only, not intended to be an investment recommendation. 10 Aviva Investors: Public
Connected thinking in action: 5G Connected research platform Investment case : Capex to reach $26bn in 2022 • Telecom (vs $528 in 2018) New product cycle requiring new • components, software and services Equities ESG Real Assets Telecom equipment MA&M Global Solutions Credit Smartphones REITS What led us to the idea: Numerous industry • management meetings Extensive analysis of impact new • Semiconductors capex cycle will have on market shares and pricing / margin profiles Source: Aviva Investors as at 6th January 2020. Position example for illustrative purposes only, not intended to be an investment recommendation. 11 Aviva Investors: Public
ESG Insight Harnessing quantitative tools with qualitative research Aviva Investors proprietary ESG model indicators Environmental Social Governance Climate change • Corporate governance Human capital • • Corporate Biodiversity • Corporate behaviour Stakeholder relations • • Pollution & waste • Supply chain Accounting • • Inequality Ease of doing business • • Environmental performance Institutions • Human development • Sovereign • Natural hazards Gender inequality State fragility • • • Infrastructure Press freedom • • Source: Aviva Investors. Aviva Investors: Public 12
Responsibility built-in Our heritage: holding companies to account since 1970 Founding signatories of UK Corporate Governance code (1994) & UN Principles for Responsible Investment (2006) Shaping sustainable capital markets roadmap via FSB Task Force for Climate-related Financial Disclosures (TCFD) & EU High Level Expert Group on Sustainable Finance (HLEG) Founding member of the Corporate Human Rights Benchmark, Sustainable Stock Exchange and World Benchmarking Alliance 13 Aviva Investors: Public
Responsibility built-in Recent highlights Voted on 54,335 resolutions at 4,173 shareholder meetings; voted against 27% of management resolutions, including 49% of pay proposals in 2018 Engaged 1,854 companies as part of our stewardship responsibilities in 2018 Case study: proposed and co-led resolution for greater disclosure on BP’s climate change policy 14 Aviva Investors: Public
Our recent awards Winner of UN Foundation Global Leadership Award RI Award for Innovation and Industry Leadership Winner of International Corporate Governance Network Global Stewardship Disclosure Award 15 Source: Aviva Investors 15 Aviva Investors: Public
Portfolio Construction Aviva Investors: Public
Robust portfolio construction: protecting capital 3% 2% 1% 0% -1% -2% -3% -4% -5% -6% -7% -8% Dec-18 Oct-18 Aug-15 May-19 Jan-16 Feb-18 Sep-15 Jun-15 Mar-18 Aug-19 AIMS Target Return SICAV (gross returns) Global equities Past performance is not a guide to future performance. Source: Aviva Investors as at 31 December 2019. Performance contribution is shown gross of all fees, share class I, mid-to-mid, in EUR, for AIMS Target Return SICAV. Inception date 1 July 2014. Global equities represented by the MSCI All Country World Equity Index (local currency). 10 worst equity months since Fund inception The value of an investment and any income from it can go down as well as up. Investors may not get back the original amount invested. 17 Aviva Investors: Public 17
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