Aviva launches new smooth managed fund
written by Bella Palmer
The fund will provide an option for cautious investors by offering a distribution technology risk rating of 4
Aviva has launched a new smooth managed fund (SMF2) which is available through the firm’s platform on pension and bonds.
The fund will provide an option for cautious investors by offering a distribution technology risk rating of 4 as compared to the existing Aviva smooth managed fund (SMF) which remains available for investors with a greater risk appetite and provides a distribution technology risk rating of 5.
SMF was launched in response to demands for investments that deliver better than cash returns but with a smoother investment experience.
SMF2 provides another option for advisers’ clients who are looking to benefit from potential investment returns, but lack confidence or investing experience. It benefits from the same transparent smoothing mechanism as SMF. Yet, it has a greater allocation to less volatile, fixed interest assets.
The smooth growth rate for SMF2 is 3.75% plus Bank of England (BoE) base rate for the pension, and 3% plus BoE base rate for the bond as compared to the SMF rates of 5% plus BoE base rate for pension, and 4% plus BoE base rate for the bond.
The fund includes ESG considerations throughout the investment process which is in line with Aviva’s 2040 sustainability ambition.
Aviva head of investment specialist sales Jean-Paul Grenade said: Understandably, after a period of market turbulence there is more demand for products that offer less volatility, and this fund provides the solution for those that are seeking greater returns than they’d get in deposit accounts but with a fund that has a track record of stability.
The global nature of the assets also means a diversification of risk for a UK investor, most of whose risk will be held in the UK, Grenade said. In this fund, around 90% of assets are outside of the UK, which gives a greater spread of risk. It has also experienced higher returns over the last 10 years than UK-only equities.
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