A simple solution to the investment puzzle. Multi-asset Funds. Ready-made investment funds matched to your attitude to risk

Transcription

1 A simple solution to the investment puzzle Multi-asset Funds Ready-made investment funds matched to your attitude to risk

2 Contents Why Aviva Investors? 2 A simple solution to investing 3 Are these funds suitable for me? 3 What are Aviva Investors Multi-asset Funds? 4 Asset classes 5 Asset allocation 5 Your attitude to risk 6 Explaining diversification 7 Key benefits 8 Key risks for you to consider 9 Why choose Aviva Investors for Multi-asset Funds? 10 Will I have to pay tax? 12 Regular capital withdrawals 12 How to invest 13 Aviva Investors is the global asset management business of Aviva, providing investment solutions to meet your needs. Why Aviva Investors? A global name you can trust Aviva currently operates in 28 countries across the world, providing investments, savings and insurance to around 53 million customers and has 379 billion* of assets under management. Aviva s aim is to deliver prosperity and peace of mind to its customers. Aviva Investors is a global asset management business dedicated to building and providing focused investment solutions for clients. Aviva Investors employs over 1,390 people in 16 countries. With assets under management in excess of 259 billion across a range of real estate, equity, fixed income, money market and alternative funds, Aviva Investors clients benefit not only from a unique access to, and experience of, local markets but also from the availability of considerable global resources. * Source: Aviva, as at 31 December Source: Aviva Investors, as at 31 December

3 A simple solution to investing Looking for the best home for your investments can be a tricky decision. Leaving your money invested in cash may seem an easy and safe option, but returns available are at a historical low and your money may actually be losing its relative value due to the effects of inflation. There are other asset classes to consider including shares, bonds, gilts, property and commodities, such as oil and gold. Each of these asset classes tend to perform better under different economic conditions, making it hard to know which one to choose at particular points in time. But don t despair, there is a potential solution to this investment puzzle. Are these Funds suitable for me? The Funds may be suitable for customers who: are looking for an investment that diversifies across a range of asset classes and geographical areas are looking for an investment that suits your attitude to risk be it cautious, balanced or adventurous are looking for unrestricted access to your money should you wish to withdraw your investment at any time however, these Funds are regarded as medium to long term investments - realistically 5 years or more have a lump sum of 1000 or more to invest directly ( 500 to invest in a Stocks & Shares ISA) or can make regular monthly payments of 50 or more are aged 18 and over already have savings you can easily access and have already considered or made longer-term financial plans are comfortable accepting that the value of the investment in these Funds can go down as well as up would like to have the option of taking regular capital withdrawals. 3

4 What are the Aviva Investors Multi-asset Funds? Our range of Multi-asset Funds provides you with a one-stop investment shop. They have a global blend of asset classes including equities, fixed income, commodities and property, allowing you to take advantage of the benefits of diversification. The Funds are designed to deliver steadier returns than a fund investing in most single asset classes such as UK equity. The Funds are run by specialist multi-asset fund managers who decide which asset classes to invest in and when to adjust the blend of asset classes. Funds tailored to your attitude to risk We are all individuals and your personal attitude to risk will likely be different to the next person s. The Aviva Investors Multi-asset Funds meet a broad range of customer needs, from the more conservative investor who has a cautious approach, up to an adventurous investor who is willing to accept a higher level of risk for potentially greater returns. The value of the Funds can go up as well as down, the extent of these possible fluctuations in value will increase depending on the Fund chosen. Likewise the potential returns over the longer term could be higher if more risk is taken - however there is no guarantee which of the Funds will perform the best. Aviva Investors Cautious Multi-asset Fund For customers who want to take a cautious approach when adopting the Multi-asset strategy, this means the mix of assets will be more conservative than the balanced approach, the Fund will still contain volatile assets but in a lower proportion than the balanced fund. Aviva Investors Balanced Multi-asset Fund For customers who want to take a balanced approach when adopting the Multi-asset strategy, this means the mix of assets will be more evenly spread between higher risk and lower risk, the Fund will be more volatile than the cautious fund. Aviva Investors Adventurous Multi-asset Fund For customers who want to take a more adventurous approach when adopting the Multi-asset strategy, this means the mix of assets will be of a more aggressive nature than the balanced approach to the strategy, the Fund will be more volatile than the balanced fund. More risky A financial adviser can help you to understand your attitude to risk and whether these Funds are suitable for you. Once you have made your selection, you can leave the research and selection of asset classes to us, safe in the knowledge that our investment experts are looking after your money on a daily basis and adjusting the Funds if short-term investment opportunities arise. We recognise that as circumstances change, so can your attitude to risk. As a result you may want to switch between these Funds, which you can do free of charge. 4

5 Asset classes Below are some examples of the asset classes that would typically be used in the Multi-asset Funds. Equities (shares) You can buy shares in different types of companies and receive returns if the company performs well. - Large, medium or small sized companies - UK, European, Worldwide - New or established companies Property As well as owning your own home, you could also put money into commercial property. - Office blocks - Retail outlets - Property related shares Commodities Physical resources that are driven by supply and demand. - Oil - Corn/Wheat - Precious metals (e.g. gold) Fixed Income (bonds) Long term loans. In return you will receive a fixed rate of interest each year, and your money back at the end of the loan. Cash Easy to access, easy to understand. - Loans to governments - Loans to companies (known as Corporate Bonds) - Deposit and cash deposit accounts - Money Market Instruments Exposure to property and commodities within Multi-asset Funds will be via collective investment schemes and Exchange-Traded Funds (ETFs). Exposure to other asset classes may be obtained by, but not limited to, investment via collective investment schemes and ETFs. An ETF is a type of investment fund that tracks an index such as the FTSE 100. Asset allocation Our philosophy is simple: we believe the most important driver of long-term performance for Multi-asset Funds is the asset allocation decisions we make, i.e. allocating between shares and bonds (rather than picking whether we should invest in share A or share B). Our dedicated Multi-asset Fund (MAF) team makes asset allocation decisions. Its aim is to provide attractive returns in keeping with customers attitude to risk. It does so by creating the optimum longterm mix of asset classes for each Fund. It also decides whether to take advantage of short-term market opportunities. The MAF team uses lower cost investments in the Funds in order to try and keep overall costs down. 5

6 Your attitude to risk As a concept risk is often met with some nervousness, but when it comes to investing, without taking some risk you are unlikely to achieve the level of return you need. There are many factors to consider when assessing your attitude to risk. We recommend you speak to a financial adviser to ascertain your attitude to risk. What will you use the money for? Your investment goals can help to determine the amount of risk you are prepared to take. Below are some of the investment goals you may have. Generally, the higher your investment goal, the higher the level of risk you would probably need to accept. Supplement a pension Saving for a house purchase To pay for the children s education To build up savings for an inheritance gift Saving for a rainy day What is your own risk level? Personal factors will also impact your attitude to risk. Below are some of the considerations you should take into account to fully appreciate your risk level. What stage in your life you are at Length of time you are prepared to invest How quickly you need access to your money Your attitude to losing part of your money 6

7 Explaining diversification Diversification is the art of blending different asset classes with the aim of growing your money, whilst also reducing the risk of it falling in value. For example, when equities drop in price this may be offset by a rise in bond prices. The more asset classes you combine, the smoother your returns should be. In simplistic terms, diversification means not keeping all your eggs in one basket. Although you could buy and manage your own mix of shares, bonds and other assets directly, it s a time consuming and complex way of achieving diversity. You would also need a tremendous knowledge of the financial universe to make informed decisions about when to buy and sell these different investments. This is where Aviva Investors can help simplify the world of investing. Our range of ready-made Multi-asset Funds invest in a diverse range of asset classes and benefit from the breadth of our investment skills and knowledge. They are designed for customers who have either a cautious, balanced or an adventurous approach to risk. 7

8 Key benefits Opportunity for growth The Funds offer multiple sources of growth potential across a range of assets. Fully diversified These Funds are specifically designed to hold multiple assets across any geographical region with an aim to reduce risk across your investment. Active asset allocation You don t need to worry about moving your investment around; our Multi-asset Fund team will monitor your investment on a daily basis and review performance of the assets held within the Fund. They will ensure your Fund is aligned to your chosen level of risk. Tax efficient Our team are able to switch assets within the Funds without triggering any Capital Gains Tax (CGT) charges*. The Funds are also free of both CGT and any personal Income Tax if they are held within an ISA. Although an ISA is tax efficient, the underlying funds may have to pay tax that cannot be reclaimed. Availability Until a few years ago, multi-asset investing was generally only available for corporate clients. Since the benefits of diversification have been recognised, these funds are now becoming more widely available to individual investors. Easy access Should you ever need to access some or all of your investment, you can do so with no exit fees, giving you control should your circumstances ever change but we do recommend these Funds are ideally held for 5 years or more. *Please note that gains will potentially be subject to CGT if you decide to sell the Funds. 8

9 Key risks for you to consider The value of assets are subject to market fluctuations and can move irrationally and be unpredictably affected by many and various factors including political and economic events and rumours and as such the value of investments may go down as well as up and you may receive less than the original amount invested. There can be no assurance that these Funds will meet their investment objective. As your investment may be subject to short-term market fluctuations your investment should be viewed as a medium to long-term investment. As these Funds may invest outside of the UK or hold currencies other than Sterling, any currency exchange rate movement may cause the value of your investment to fall as well as rise. For full information about the risks involved when investing in these Funds, please refer to the Simplified Prospectus. A copy is available on request. 9

10 Why choose Aviva Investors for Multi-asset Funds? Our Multi-asset Funds have been developed to match a range of risk appetites, be it cautious, balanced or adventurous. Our Multi-asset fund capabilities have been at the heart of our business for more than a decade Our Multi-asset team boasts over 30 years of combined experience Our Multi-asset team is backed by dedicated asset allocation specialists We are one of the largest and most accomplished property managers in the world Our processes and forecasting methods are designed to help our funds achieve their investment aims whatever the economic market conditions Management of risk is integral to what we do on a daily basis Indicative asset allocations Aviva Investors Multi-asset Cautious Fund Designed for customers who require a globally diversified multi-asset portfolio managed with a cautious approach to risk. The Fund aims to provide a combination of capital growth and income** by mainly investing in lower risk investments such as UK government bonds (gilts), highly-rated corporate bonds (bonds) and some cash but will also include a small amount of exposure to equities, commodities and property. 54.5% Bonds & Gilts 20.5% Equities 15% Property 4% Commodities 1% Cash 5% Other* Slowdown Gilts Recession Recovery Boom *Includes a specialist Fund designed to take advantage of short-term market opportunities. **The Fund only issues accumulation shares at present, and therefore any income will be reinvested. Less risky Commodities Property Equities Corporate Bonds Ass 10

11 Aviva Investors Multi-asset Balanced Fund Designed for customers who require a globally diversified multi-asset portfolio managed with a balanced approach to risk. The Fund aims to provide capital growth by having a balance of exposure between equities, commodities and property and lower risk investments such as UK government bonds (gilts), highly-rated corporate bonds (bonds), and cash. Aviva Investors Multi-asset Adventurous Fund Designed for customers who require a globally diversified multi-asset portfolio managed with an adventurous approach to risk. The Fund aims to provide capital growth by mainly investing in equities with a small amount of exposure to UK government bonds (gilts), highly-rated corporate bonds (bonds), commodities, property and cash. ds & Bonds Gilts & Gilts itiesequities erty Property modities Commodities Cash er* Other* 48% Equities 48% Equities 25.5% 25.5% Bonds & Bonds Gilts & Gilts 15% Property 15% Property 3.5% 3.5% Commodities Commodities 1% Cash 1% Cash 7% Other* 7% Other* 71% Equities 71% Equities 9% 7% 4% Property 9% Property Bonds 7% & Bonds Gilts & Gilts Commodities 4% Commodities 1% Cash 1% Cash 8% Other* 8% Other* Boom Exposure to property and commodities within Multi-asset Funds will 100 be via 100 collective investment schemes and Exchange-Traded Funds (ETFs). Exposure to other asset classes 91% may Asset 91% be Allocation Asset obtained Allocation by, but not limited to, investment via collective investment schemes and ETFs. An ETF is a type of investment fund that tracks an index such as the FTSE % Security 6% Security Selection Selection These charts are indicative asset allocations for the Multi-asset Funds % as % illustrated on pages 10 & 11 and will be subject to change. 2% Market 2% Market Timing Timing modities Commodities 2% Other 2% Factors Other Factors rty Other Factors Other Factors Market Timing Market Timing Security Selection Security Selection Asset Allocation Asset Allocation More risky Asset AAsset AAsset BAsset BSmoothed Smoothed portfolio portfolio 11

12 Will I have to pay tax? Make your returns tax-efficient by investing in an ISA If you invest in an ISA, you will have no personal UK Income or Capital Gains Taxes to pay on this investment. Although an ISA is tax efficient, the underlying funds may have pay tax that cannot be reclaimed. ISA Limits You can invest in the Fund through a Stocks & Shares ISA providing you have not invested in another Stocks & Shares ISA already in this tax year. The overall ISA allowance for the 2011/2012 tax year is 10,680. Up to 5,340 of the ISA allowance can be saved in a Cash ISA with one provider. The remainder of the 10,680 can be invested in a Stocks & Shares ISA. Alternatively the full 10,680 can be invested in a Stocks & Shares ISA with one provider. ISA transfer You can also consolidate existing ISA holdings by transferring them into the Funds. As well as transferring Stocks & Shares ISAs, you can also transfer funds held in a Cash ISA into a Stocks & Shares ISA without affecting your annual ISA allowance. Please note, you cannot transfer back into a Cash ISA from a Stocks & Shares ISA. How does the tax work for investments outside an ISA? Income Tax For investments made outside of an ISA, the income that is reinvested in the Funds will be taxed as dividend income and you will be issued with a tax voucher. Capital Gains Tax Any capital gain on cashing in your investment in the Funds may be liable to Capital Gains Tax. Please note that this tax explanation applies to individuals who are UK residents only. To discuss your personal tax situation, please see your financial adviser. Tax laws, rates and allowances may change in the future. Regular capital withdrawals Can I make regular capital withdrawals from these Funds? Yes. We offer a regular capital withdrawal facility within these Funds. Should you require regular capital withdrawals from your investment we have designed a flexible automated withdrawal process that allows you to make regular withdrawals from your investment. This facility is only for investors with an investment over 10,000 in value at the time of the withdrawal and the investment must be held for at least a year before withdrawals can commence. You should be aware that if you take regular capital withdrawals from your investment you may erode the capital value of your investment. Any withdrawal from your investment will be treated as a sale and may be liable for Capital Gains Tax. Any monies withdrawn from an ISA cannot be reinvested back into an ISA within the same tax year unless it is treated as a new contribution within your annual ISA allowance. For further information on regular capital withdrawals, such as minimum and maximum amounts permitted, please see the Simplified Prospectus which is available on request. 12

13 How to invest Once you have decided which Fund is suitable for you there are various ways to invest: Some ways to invest Direct Investment Minimum Lump Sum Investment 1,000 Minimum Regular Savings Investment 50 per month No Maximum Stocks & Shares ISA Minimum Lump Sum Investment 500 Minimum Regular Savings Investment 50 per month 10,680 for 2011/2012 tax year ISA Transfer Minimum Investment 500 No Maximum For an ISA transfer, you can transfer a minimum of 500 from an existing Cash or Stocks & Shares ISA to us. ISAs for the current tax year must be transferred in their entirety; ISAs from previous tax years can be partial transfers. How do I invest in these Funds? You must read the Simplified Prospectus document Fill in the relevant application form (see some ways to invest to decide which form you need) If you are in any doubt about whether or not these Funds are suitable for you, we recommend that you consult a financial adviser before making any investment decisions 13

14 14

15 We recommend that you consult a financial adviser before making any investment decisions. 15

16 Aviva Investors is a business name of Aviva Investors UK Funds Limited, the ISA Manager and Aviva Investors UK Fund Services Limited, the Authorised Fund Manager. Registered in England Nos and respectively. Authorised and regulated by the Financial Services Authority. FSA Registered Nos and respectively. Registered addresses: 1 Poultry, London EC2R 8EJ. Both are Aviva companies. MC1991-V CI /2011