The LTAF will start with almost £150m from Aviva in a mix of assets and cash and will have no fixed lifespan. It will invest with a UK bias in Europe and North America across fintech and insurtech, healthtech, science and technology, and climate and sustainability.

Aviva has targeted an overall return of 15% per year on a five-year rolling basis. It will make its venture investments through third-party funds and other evergreen vehicles.

Dame Amanda Blanc, group CEO at Aviva, said: “Aviva is investing more and more in the UK, to support growth and back Britain’s flourishing early-stage companies. This new fund will provide vital finance to some of the UK’s most promising, high-growth businesses, aiming to deliver great returns for our customers.”

This will be the fourth LTAF launched by Aviva, following the Multi-Sector Private Debt LTAF in November.

See also: PA Live A World Of Higher Inflation 2025

Mark Versey, chief executive officer at Aviva Investors, said: “This fund marks another step in our ambition to unlock the benefits of Private Markets for more investors, and to be the go-to provider for the UK’s DC and Wealth markets. We are incredibly pleased to expand our LTAF range further, making it easier for investors to allocate more to these asset classes and to enjoy the returns and diversification they can offer.

“Targeting venture returns, we expect our new fund to help the companies of tomorrow get ready for the future, driving innovation and growth through investments that also have the potential to have a positive societal and environmental impact.”

He and fellow global equities managers Francois de Bruin and Matt Kirby announced their departure to “pursue other opportunities in the market” in August, resurfacing in November at RLAM where they had been appointed to its £613m Global Equity Select fund.

Less than a month following the announcement, he will return to Aviva to resume management of the £688m Aviva Global Equity Income fund, which he had led since 2013.

See also: Aviva Investors: Internal assets drive £1.7bn net outflow

Aviva CIO Daniel McHugh said he was “delighted to be welcoming Richard back” and for him to begin “resuming his duties in due course”.

Former Aviva Climate Transition Global Equity fund manager Andrea Carzana also departed the firm in August, but has yet to announce his next position.

Investors have flocked to IA Volatility Managed funds in recent years as soaring inflation and rising interest rates sent markets into disarray. It was the best-selling sector for two years running in 2022 and 2023, according to the Investment Association, raking in net inflows of £5.6bn.

And this year, investors upped their holdings in the sector by a further £2.6bn (until the end of August), sending the assets under management (AUM) of the average volatility managed fund to £364m. But some funds managed to outdo their peer group despite being a fraction of that size.

WS Aegon Risk-Managed 6

Fund size: £99m

The WS Aegon Risk-Managed 6 fund is up 23.9% over the past three years – the third-highest return in the sector, yet it is significantly smaller than some of its peers, with AUM of £99m. It is the highest-risk portfolio in the six-fund range, consisting mostly of equities (94.3%), but some might argue it is worth the additional gamble given its sector-beating return.

However, investors might want to keep an eye on concentration levels, with just two trackers – iShares’ US Equity and UK Equity Index funds – accounting for half (49.9%) of the entire portfolio. The fund factsheet says it is “designed for investors who have high tolerance for risk, are seeking to maximise capital growth over the long term and are comfortable with the potential for significant and sustained falls in value”.

Anthony McDonald, head of portfolio management at Aegon, highlights the industry’s “tendency to overcomplicate fund design”, stressing that groups can “add value through simplicity”. The risk-managed range is intended to be simple because it keeps costs low, with an ongoing charges figure of 0.25% being less than half of that of the 0.57% average charge across the sector.

Aviva Multi-asset Core V

Fund size: £90m

Offering an even lower fee of 0.15% – while still beating the sector average with high returns – is the Aviva Multi-asset Core V fund. This is also the highest-risk option in its range, with a 100% weighting to equities. But this has paid off for investors, who would have seen their savings rise 22.5% over the past three years.

The fund simultaneously managed to avoid the widespread volatility plaguing markets over the period, taking a different approach than its peers in avoiding risk, according to researchers at RSMR. “An important differentiator for the range relative to the wider market is their risk-targeting approach, which is set towards specific levels of global equity volatility,” they say. “[The team believes] a relative volatility target is more appropriate than an absolute target as the market environment and volatility regime constantly evolve over time.”

This combination of high returns for relatively low risk makes the fund a prime holding for fee-conscious investors seeking steady returns, analysts at RSMR add.

“The funds are managed by a well-resourced and experienced multi-asset team, using a well-established and detailed investment process, and with an OCF fixed at 0.15%, the funds are very competitively priced,” they claim. “Based on these factors, we believe the funds are an excellent option for advisers seeking exposure to a lower-cost, risk-targeted multi-asset solution for their clients.”

Invesco Summit Growth 5

Fund size: £32m

Another tiny fund that is outshining its larger peers is Invesco Summit Growth 5. The fund is up 22.4% over the past three years, overtaking the IA Volatility Managed sector’s average return by 15.5 percentage points.

With an 84.5% weighting to global equities, it is again the highest-risk option in its range. Over a third (38.5%) of that is held in US equities, with its two largest holdings – Invesco’s S&P 500 and MSCI USA ETFs – accounting for 27.8% of the fund.

BlackRock Volatility Strategy IV

Fund size: £8m

Though a fraction of the size of its average peer, the £8m BlackRock Volatility Strategy IV fund generated a return more than three times the size of the IA Volatility Managed sector over the past three years. It soared 21.3% despite the turbulence of the period, while its average peer gained a more modest 6.9%.

Many investors fled to the perceived safety of cash in recent years, but this fund managed by Julian Steeds, Victor Bozza and Fabrizio Coiai is designed to be an alternative to removing money from the market. Instead, it aims to deliver steady, low-volatility returns that will grow investors’ savings and maintain their purchasing power, according to BlackRock.

It says: “Don’t let clients flee to cash and miss out on potential long-term growth. Instead, seek to reduce risk in portfolios, while staying closely aligned to a steady asset allocation.”

Liontrust MA Dynamic Passive Adventurous

Fund size: £62m

Another tiny gem that has outperformed its larger peers is the £62m Liontrust MA Dynamic Passive Adventurous fund. Managers John Husselbee and James Klempster (pictured left to right) generated a 20.1% return over the past three years.

This fund of funds offers investors exposure to a spread of equity markets across the globe, such as North America (32.17% of all regional weightings), emerging markets (20.9%) and the UK (15.1%).

This article originally appeared in the November issue of Portfolio Adviser magazine

The outflows were mostly driven by £1.3bn net redemptions from internal assets, including the expected £5.1bn run-off from the firm’s Heritage portfolio.

A further £1bn outflows came due to strategic actions from clients previously part of Aviva.

External net flows were positive at £600m, which was attributed to strong performance in multi-asset and fixed income.

See also: Tatton Asset Management sees organic inflows rise by 101% in half-year results

Meanwhile, assets under management ticked up 2% to £238bn, primarily reflecting the impact of market movements and strong flows into the firm’s Liquidity strategies.

Aviva’s wealth arm recorded £7.7bn net flows, up from £6.4bn in the same period of last year. Platform flows were up 76% on the previous year, hitting £3.1bn

Group CEO Amanda Blanc said the flows in the firm’s wealth arm reflected continued growth in workplace pensions and strong demand from Aviva’s financial adviser platform business.

Debt peaked past $313trn at the start of the year after borrowers added around $100trn of new debt to their books since 2015, according to the Institute of International Finance (IIF). It noted that $89.9trn of that was made up of government debt.

These lofty debt levels made Pidcock cautious and led him to make gold mining company Newmont the sixth largest holding in the portfolio, representing 4.8% of the £1.9bn fund.

“Fiscal policy globally is very loose, and that is a concern,” he said. “Budget deficits – even when economies have supposedly been strong – have been way too high. And that’s why we invested in gold mines.

“We thought the gold price is probably going to go up because these paper currencies are just going to get more and more diluted as governments have to print more money to pay the interest on the debt they’ve accumulated.”

Global debt (in USD) since 2015

Pidcock’s exposure to the precious metal may not seem high, but he said “everyone should have some exposure to gold, whether it’s as an insurance policy or just sensible diversification”.

And an allocation to gold may be all the more important now that its purpose within portfolios is rivalling the role traditionally held by bonds.

“If there was a new geopolitical shock, I think gold would be seen as a place to hide,” Pidcock said. “Government bonds are traditionally seen as that, but if that political shock required a lot more government expenditure, then government bonds might not be the safety net that they have been in the past.

“We saw in Covid that government expenditure ballooned and created a lot more inflation, which wasn’t great for bonds, and that’s probably where we are again now. The first reaction of governments in a crisis is to spend even more money, so I would say everyone should have a little bit of gold.”

See also: Crisis point: Concerns grow over mounting government debt levels

This was echoed by Sotirios Nakos, multi-asset fund manager at Aviva Investors, who agreed the precious metal was encroaching upon the downturn protection function historically reserved for fixed income.

“Gold is challenging the traditional role of bonds in portfolios,” he said. “While gold is generally negatively correlated with real interest rates — meaning higher real rates increase the opportunity cost of holding gold —this relationship is not stable and varies over time.

“Particularly during periods of high inflation, the real rate effect on gold becomes smaller, making it a valuable asset in a diversified portfolio, potentially rivalling bonds. For cautious portfolios, however, the volatility associated with gold can limit its overall allocation.”

While gold does have its appeals as a safe haven in a high debt world, Rathbones multi-asset manager Will McIntosh-Whyte questioned whether its rallying price can be maintained.

An ounce of the precious metal will set investors back £1,951 today, which is 25.5% more expensive than it was a year ago. But McIntosh-Whyte said its price may have been artificially accelerated by central bank buying.

See also: Gold hits record high: Fund picks to play precious metals

The World Gold Council estimates that central banks bought 2119 tonnes of gold in 2022 and 2023, which was three times higher than they had in the prior two years combined. And they pushed their buying even higher in 2024, purchasing an additional 484 tonnes in the first half of this year.

A slowdown in the central bank buying that has fuelled a powerful rally could see gold’s soaring price come to a standstill, according to McIntosh-Whyte. Fixed income could therefore keep its seat as the best protector in the case of a downturn.

“My issue with gold is that it has obviously had a very strong run,” McIntosh-Whyte added. “It’s always tricky to rationalised movement, especially when there’s been a decent amount of buy from places like China. With a weak property market, I think a lot of Chinese households are turning to gold, and the same is happening in Japan in light of the country policy that we’ve seen there.

“There has just been a significant amount of central bank buying over the past year or so – it’s my view that US treasuries are a more reliable instrument to help protect portfolios in the majority of scenarios.”

See also: Interest rates: Tough decisions ahead for central banks

Yet the US government’s towering debt levels have not gone amiss on McIntosh-Whyte. The nation’s $35.3trn of debt accounts for around a third of all global government debt, making McIntosh-Whyte slightly more sceptical of his US treasury holdings.

“Earlier this year, we started slightly diversifying our exposure away from the US and into a number of European nations where we see the fiscal situation being a bit stronger, and where we’re more relaxed about the inflationary environment,” he said.

“But that’s coming from a position where we’ve actually held a lot. So I’m not rushing to sell my US treasuries to put it into gold – I’d rather just keep a little bit of dry powder.”

The move its part of a wider restructure in the firm’s real assets business, which has rebranded as Aviva Investors Private Markets.

The team will be created by moving the Aviva Ventures investment team to sit within its private markets function.

Led by Ben Luckett, VC and strategic capital managing director, the team currently oversees investments in excess of £450m.

The firm said the decision follows the Mansion House announcement in July 2023, which outlined plans to unlock investment into emerging industries, including unlisted companies.

See also: Artemis co-founder John Dodd to retire

As part of its foray into private markets, Aviva has rolled out two long-term asset funds (LTAFs) over the last 18 months, including the £1.5bn Aviva Investors Real Estate Active LTAF.

Mark Versey, Aviva Investors CEO, said: “This is a terrific example of Aviva Investors in growth mode. Private markets assets today are severely underrepresented in the portfolios of UK DC pension funds relative to global peers.

“Driven by the UK’s supportive policy environment, which is epitomised by the Mansion House Compact, the scale of the potential investment opportunity is significant.

“With two LTAFs already in the market we are actively looking at how to give clients suitable access to the full breadth of benefits that private markets can offer, including unlisted equities.”

Last month (14 August), the wider Aviva business announced a 14% increase in operating profit in the first six months of the year, jumping to £875m from £765m at the end of 2023.

The firm accounted much of this increase to its General Insurance businesses in the UK & Ireland and Canada, which increased their operating profit by 7% to £503m over the period (up from £470m in the second half of last year).

Premiums here increased 18% to £3.8bn while UK personal lines premiums jumped an even higher 30% to £1.8bn, which may have been driven by the strong rating actions taken in the high-inflation environment.

Other branches of the business reported improved profits too. Aviva Investors operating profit more than tripled to £18m from £5m last year.

Yet four fund managers at the firm announced their exit last week to “pursue other opportunities in the market,” leading Aviva Investors to put an interim management plan in place to minimise disruption for clients.

See also: Jupiter UK Opportunities fund to close due to ‘limited demand’

Aviva’s Insurance, Wealth & Retirement also announced a 9% increase in operating profit to £532m in the first half of the year, but this was offset but its operating value, which dropped by a quarter (25.4%) as it normalised from the high gains it made last year when it made operating changes to the CSM.

For shareholders, the firm announced an interim dividend of 11.9 pence per share (up 7%) having completed another £300m share buybacks in June.

Aviva’s acquisitions of Probitas in July for £249m and AIG Life in April for £453m helped improve the group’s operating profit, according to Aviva CEO Amanda Blanc, but she stressed that organic growth was the key driver.

“To change our mix of earnings over time, organic growth is a key lever,” she said. “We have no shortage of opportunities here – and we’re already delivering right across the business.”

Blanc said Aviva is planning to launch a new venture and growth capital strategy, which “will open up new investment opportunities” for pension customers and “help unlock billions of pounds of investment into unlisted growth companies”.

• US Federal monthly budget deficit (or surplus)
• First-half results from Marshalls
• In the US, quarterly results from Barrick Gold

Tuesday 13 August

• First-half results from Dowlais, Just Group, Genuit and Network International
• German ZEW economic sentiment survey
• US producer price inflation
• US NFIB smaller companies survey
• In Asia, quarterly results from Sea
• In Europe, quarterly results from Henkel, Pandora and HelloFresh
• In the US, quarterly results from Home Depot, Flutter Entertainment, Ten Cent Music, Franco-Nevada, Coherent and Wolfspeed
• UK unemployment data

The Office for National Statistics will release the unemployment and inflation rate for the UK on Tuesday and Wednesday, respectively.

Inflation for June remained at 2%, the Bank of England’s target number, and was followed by an interest rate cut to 5% from 5.25%. In the last employment reading which took into account the three months to May, employment sat at 4.4%.

Russ Mould, AJ Bell investment director, and Danni Hewson, AJ Bell head of financial analysis, said: “That was unchanged from April and remains low by historical standards, but it still represented a marked step up from the low of 3.6% reached in August 2022 and the highest reading since September 2021.

“As such the Bank of England will be on alert, even if slack in the jobs market may take some of the heat out of wage demands, which remain a concern for policymakers as a potential source of sustained inflation – total pay growth, including bonuses, was 5.7% year-on-year in May.”

Added together, the inflation and unemployment readings create the ‘Misery Index’, created by economist Arthur Okun, which currently sits at 6.4.

“That is below the post-January 2000 average of 8.0 and may offer consumers some breathing space after a very difficult few years, even if inflation could rebound a little in the second half, thanks to the base effect of energy prices,” the AJ Bell team said.

“There are also gathering concerns that Western economies may be slowing down faster than policymakers have anticipated, as the monetary medicine of the interest rate increases pushed through between December 2021 and August 2023 has gradually taken effect, but a lower misery index reading and interest rate cuts could provide a helpful economic backdrop for the new Labour government.”

Wednesday 14 August

• First-half results from Balfour Beatty
• Interest rate decision from the Reserve Bank of New Zealand
• US consumer price inflation
• US oil inventories
• In Asia, quarterly results from Hon Hai Precision, China Unicom and Samsonite
• In Europe, quarterly results from UBS, E.On, Hapag-Lloyd, Vestas Wind Systems, Carlsberg, Glanbia, TUI and Thyssen Krupp
• In the US, quarterly results from Cisco
• UK inflation data

Aviva will share its first-half results on Wednesday, following shares reaching 12-month highs before the market selloff on 5 August.

The success for shares comes with chief executive Dame Amanda Blanc’s strategy to streamline the business by focusing on British, Irish and Canadian operations; Aviva Investors; and areas with looser regulatory capital requirements.

In the first-half update, analysts keep eyes on Aviva’s medium-term goals, including £2bn in annual operating profit by 2026 and £5.8bn of dividends and share buybacks from 2024-2026.

In 2023, Aviva increased its dividend by 8%, leading to an upgraded 2024 target of “mid-single digit” growth.

“In the first quarter trading update, Aviva flagged a strong set of numbers,” Mould and Hewson said.

“Aviva also continues to return cash to shareholders via share buybacks. The company completed a £300 million buyback in 2023 and immediately launched an identical scheme for 2024. Add together the forecast dividend (£950 million) and the buyback and Aviva is expected to return almost 10% of its market capitalisation in cash to its shareholders this year alone.”

Thursday 15 August

• First-half results from Rank and ITM Power
• UK GDP growth
• UK manufacturing, construction and industrial output
• US retail sales
• US industrial production
• US NAHB housebuilding industry survey
• US weekly initial unemployment claims
• Chinese tangible fixed asset investment, retail sales and industrial production growth figures
• In Australia, quarterly results from Telstra
• In Asia, quarterly results from Lenovo
• In Europe, quarterly results from Ørsted and Christian Hansen
• In the US, quarterly results from Wal-Mart, Applied Materials, Deere, Grab and Tapestry

Friday 16 August

• UK retail sales
• US new housing permits
• US new housing starts
• In Europe, quarterly results from Kingspan

An Aviva spokesperson said the managers are exiting to “pursue other opportunities in the market”.

“We thank them for their contribution to the business over the years and wish them well in their future endeavours.”

Saldanha runs the firm’s £581m Global Equity Income and Social Transition Global Equity funds alongside Kirby, while he also manages the £516m Global Equity Endurance strategy alongside De Bruin. Carzana, is co-portfolio manager of the £722m Climate Transition Global Equity strategy.

Aviva said it remains committed to its equity franchise, and has initiated a process to replace the fund managers.

Meanwhile, the firm said it has put in place an interim management plan to minimise disruption for clients.

See also: JP Morgan American investment trust selects new co-managers

Saldanha joined Aviva Investors in 2006, and has managed global equity income mandates for the firm since 2009.

De Bruin was previously an analyst at Bridge Fund Managers, before arriving at Aviva in 2014.

Kirby began his investment career at Aviva in 2016 as a graduate intern, before becoming an analyst covering European healthcare a year later.

He was promoted to co-portfolio manager of the Aviva Investors European Equity strategy in 2020.

See also: L&G Asset Management profits drop 14% following strategy shakeup

Carzana joined Aviva Investors in 2022 as a senior portfolio manager. Prior to this, he was a portfolio manager at Columbia Threadneedle working across several ESG funds.

This May marked the 11th tournament, bringing in 500 people from the financial services industry and making up 40 teams. Aviva, under the team name “Aviva Las Vegas”, came away as champions.

The event also included a fancy dress theme, with the top prize for costumes awarded to UK accountancy firm Buzzacott, dressed as flying pigs.

LGT Wealth Management has hosted the event since 2011, this year at the Honourable Artillery Company. In the past three years, the tournament has raised over £168,000 for Demelza.

Ben Snee, CEO of LGT Wealth Management, said: “We are proud to have raised a substantial amount for our charity partner, Demelza. It is an honour to partner with them and support their vital work. We extend our gratitude to everyone who participated and supported this year’s event; the camaraderie and enthusiasm of all involved make it a truly unique event for a very worthy cause.”

However, the sector suffered its largest outflow since June 2023 in February, as investors pulled a net £923m from cash funds. With central banks expected to begin reversing the rate hiking cycle at some point later in the year, what are the prospects for MMFs going forward?

Looking back over the past 18 months, Alastair Sewell, Aviva Investors liquidity investment strategist, says the combination of volatility pushing investors to lower-risk allocations coupled with the speed that interest rate hikes fed through to money market yields upped the attraction of cash-like products.

See also: Macro matters: The trouble with Trump

“Despite its current attractions, the asset class appears under-utilised in the UK. While flows have certainly been positive in the UK in 2023, the total share of MMFs in overall fund asset remains low,” he says.

“Contrast this with the US where money market products are a mainstay of fund allocations and have received significant new assets. US MMF assets increased by over $1trn (£794.9bn) in 2023 – to around $6trn –with the retail share of that total rising to about 40% from 20%.”

Likewise, some investors have found money markets appealing in comparison to weakened sentiment toward equities since 2022, according to Interactive Brokers senior economist José Torres.

“During the past few years, investors have had modest expectations for equities, despite them outperforming strongly, with many analysts expecting stocks to generate returns ranging from 7-9%. This expectation has made the risk-free yield of money market strategies attractive relative to equities.

Read the rest of this article in the April issue of Portfolio Adviser magazine

Based in London, he will be co-manager on both the £193m Aviva Investors UK Equity Unconstrained strategy, and the £163.8m Aviva Investors UK Small and Mid-Cap strategy.

Parker joins the firm from Columbia Threadneedle, where he led the firm’s UK All Cap and UK Mid Cap equity strategies for the CT Universal Multi-Asset Portfolios range.

See also: Aberforth to launch new investment trust

He holds over 20 years’ experience in various roles including portfolio manager, portfolio assistant and analyst roles at BMO Global Asset Management, prior to its acquisition by Columbia Threadneedle, and F&C.

The move is the second addition to Aviva’s UK equities team this year, following the hire of Kunal Kothari as a portfolio manager in February, who also joined from CT.