10 Sep 2023
Every month we study the universe of funds in the investment marketplace to assess whether they meet our exacting standards and should be given the RSMR seal of approval.
Here are the new recruits from our August review:
The trust seeks to invest in a diversified portfolio of mining and metal assets from around the world. The managers are experienced in managing the commodity cycle and having a wide remit allows them to invest across differing market environments applying their macroeconomic view to the underlying portfolio.
The team combine a top-down analysis of the macroeconomic environment, commodity industry and a bottom-up research process to determine the composition of the underlying portfolio. The team’s focus is to understand where the best returns will come from based on macroeconomic fundamentals, the dynamics in the respective metals markets and a company’s exposure to a single commodity, or group of commodities in the case of the diversified operators.
The team at Blackrock are well seasoned in the commodity cycle and this current cycle is seeing a tailwind from the secular shift towards decarbonisation in which certain metals are going to pay a key role.
The Invesco UK Enhanced Index Fund is designed to offer investors exposure similar to an index while aiming to surpass its performance, after fees, over a complete market cycle. This fund seeks to strike a balance, positioned between index tracker funds and actively managed unconstrained funds.
The investment approach revolves around converting research-based insights from fundamental and behavioural finance into systematic portfolios. By blending these insights with risk controls, the team exploits behavioural biases through their stock selection model. The fund is built on the premise that inexpensive stocks (Value), persistent trends (Momentum), and high-quality companies (Quality) yield better results. The team constructs a portfolio of around 60-80 'Cheap' UK stocks to mitigate individual risk, aiming for marginal excess returns. Proprietary metrics define Value, Momentum, and Quality, with cash flow yield holding the most weight for Value. Linear models for each factor are combined using an equal risk contribution weighting scheme, adjusted during market stress. The 'Real World' portfolio optimally aligns with model portfolios, considering investment constraints and aiming for broad diversification.
The fund managers focus on achieving risk and returns characteristics comparable to the index, but with a slight edge of performance over a three-year period. This is accomplished by optimising the portfolio based on three factors of value, momentum and quality, believed to enhance returns, while maintaining a volatility profile akin to both the index and passive investments.
The Invesco UK Opportunities fund has been run by Martin Walker, Head of UK Equities, since June 2008, consistently utilising a bottom-up, high conviction approach to investing in UK large caps. Martin is supported by the UK Equities Team and Bethany Shard was appointed Deputy Manager on the fund in April 2023. The investment strategy aims to uncover undervalued companies by focussing on fundamentals, while also taking into consideration the macro-economic backdrop. The manager is agnostic of benchmark and sector positioning with a willingness to seek out non-consensus ideas and long-term performance has been strong relative to peers.
The Aviva Investors Multi-asset Core funds (MAF Core) are a range of five risk targeted portfolios that each have volatility targets relative to global equity volatility. The funds also have a performance target which is to produce an average return of at least 0.3% (gross) above the performance benchmark. They invest only in internally managed funds, primarily in passive investment strategies and as such, they are very competitively priced with an OCF fixed at 0.15%. The MAF Core funds are invested globally in both equities and fixed income, they do not invest in uncorrelated (alternative) asset classes.
The funds' management do not employ a tactical asset allocation (TAA) overlay and as such, the strategic asset allocation (SAA) is the key element in their investment process.
Aviva Investors offer a strong multi-asset proposition based on their global research capabilities and dedicated single asset class teams. The range benefits from a collective, team-based approach led by a strong core multi-asset team and is very competitively priced. Based on these factors, we believe that Aviva Investors MAF Core funds are an excellent option for advisers seeking exposure to a lower cost, risk targeted multi-asset solution for their clients.
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The value of investments and the income from them may go down as well as up and investors may not get back the amounts originally invested.