Aviva Irl Protected Growth Fund
Aviva Irl Protected Growth Fund Protection, growth and diversification April 2011 For Financial Adviser Use Only
FOR FINANCIAL ADVISER USE ONLY
Agenda Aviva Irl Protected Growth Fund
•
Your opportunity
•
5 reasons your clients will want to invest
•
How the fund works
•
Strong investment stories
•
Current performance/positioning
•
Place in a portfolio
•
Summary
FOR FINANCIAL ADVISER USE ONLY
Your opportunity Aviva Irl Protected Growth Fund •
Increasingly clients are seeking prosperity and peace of mind
•
The Irish retail market is heavily biased towards cash yet interest rates are falling
Cash deposits Cash funds
Aviva Irl Protected Growth Fund
Conventional Equity/ Property Funds
Your opportunity to offer your clients more: Security + Growth FOR FINANCIAL ADVISER USE ONLY
At a glance
Security
• 80% of highest daily unit price locked in
Unlimited Growth Potential
• No cap on growth potential of the fund • High growth asset classes • Total return of corporate bonds and eurozone equities
High Diversification
1. 2. 3. 4.
Commodities Eurozone large cap companies Corporate bonds Cash
• •
Rising market more exposure to growth component Falling market more exposure to secure component
CPPI Mechanism
FOR FINANCIAL ADVISER USE ONLY
Growth component (initially 80% exposure) Secure component
At a glance Term
Open ended – flexibility to get in and out of the fund at any time.
Availability
Available through all our actively managed investment, savings and pensions products Can be used as part of a diversified portfolio
Risk-reward rating
1
2
3
Low to medium risk Counterparty
FOR FINANCIAL ADVISER USE ONLY
4
5
How the fund works
• The components • Initial asset allocation • Dynamic allocation thereafter • Protected price in action • Back-testing of strategy
FOR FINANCIAL ADVISER USE ONLY
The Aviva Irl Protected Growth Fund
FOR FINANCIAL ADVISER USE ONLY
Initial asset allocation Aviva Irl Protected Growth Fund The Growth Component Secure Component Growth Component
33% Commodities
20%
80%
33% Euro denominated Corporate Bonds 33% Eurozone Large Cap Companies
FOR FINANCIAL ADVISER USE ONLY
Dynamic allocation thereafter Aviva Irl Protected Growth Fund
*The target maximum allocation to the growth component is 80%, however, actual maximum allocation can reach 88%. The target minimum allocation to the secure component is 20%, however, actual minimum can be 12%.
FOR FINANCIAL ADVISER USE ONLY
The Protected Price Promise Aviva Irl Protected Growth Fund
•
Protected price is set at 80% of the highest ever daily unit price of the fund since launch, regardless of investment date
•
As the fund’s unit price increases so does the funds protected price
80% Please see brochure for further details
FOR FINANCIAL ADVISER USE ONLY
Backtesting through rising market April 2003 – April 2007
Protected Growth
Growth Component
Cum Return
30.84%
52.93%
Volatility
5.50%
8.08%
Best Month
2.19%
5.23%
Worst Month
-3.35%
-3.81%
Protected Price
105.41%
Source of back testing – Aviva Investors February 2010. Please see Basis of backtesting at the end of the presentation for further details on the basis of calculation.
FOR FINANCIAL ADVISER USE ONLY
Backtesting through falling market July 2007 – March 2009
Protected Growth
Growth Component
-14.35%
-26.96%
Volatility
6.2%
15.31%
Best Month
2.6%
2.82%
Worst Month
-5%
-9.03%
Cum Return
Protected Price
80.92%
Source of back testing – Aviva Investors February 2010. Please see Basis of backtesting at the end of the presentation for further details on the basis of calculation.
FOR FINANCIAL ADVISER USE ONLY
Backtesting falling then rising January 2001 – January 2006
Protected Growth
Growth Component
Cum Return
6.41%
20.08%
Volatility
5.1%
10.75%
Best Month
4.64%
5.23%
Worst Month
-3.51%
-7.14%
Protected Price
85.19%
Source of back testing – Aviva Investors February 2010. Please see Basis of backtesting at the end of the presentation for further details on the basis of calculation.
FOR FINANCIAL ADVISER USE ONLY
Backtesting rising then falling April 03 – March 09
Protected Growth
Growth Component
15.59%
15.24%
Volatility
5.8%
10.52%
Best Month
3.1%
5.23%
Worst Month
-4.8%
-9.03%
Cum Return
Protected Price
109.35%
Source of back testing – Aviva Investors February 2010. Please see Basis of backtesting at the end of the presentation for further details on the basis of calculation.
FOR FINANCIAL ADVISER USE ONLY
Strong investment stories
•
Secure component - cash funds and cash instruments
•
Diversified exposure to three uncorrelated asset classes with strong growth stories: • Commodities: DJ UBS Commodities Index • Eurozone Large Cap Companies: DJ Euro Stoxx 50 Index Total Return • Euro Denominated Investment Grade Corporate Bonds: Iboxx € Liquid Corporates
• Equal weighting of indices in growth component • Rebalanced at least quarterly
FOR FINANCIAL ADVISER USE ONLY
Asset classes spanning the risk reward spectrum
FOR FINANCIAL ADVISER USE ONLY
Asset classes with low correlations Growth component Asset class correlations hugging 0 Correlation coefficient 04 Jan 99 – 02 Dec 09
+1
No correlation
Perfect positive correlation: Returns both positive and negative of two asset classes move in tandem
+ 0.23 Commodities vs. large cap Eurozone companies -0.06 Corporate bonds and commodities - 0.23 Eurozone corporate bonds vs. large cap Eurozone companies –0.23
0
-1
Perfect negative correlation: returns of two asset classes move by an equal amount in the opposite direction
Source: Aviva Investors January 2010
FOR FINANCIAL ADVISER USE ONLY
Story 1 Commodities
FOR FINANCIAL ADVISER USE ONLY
Diversified exposure 5 sectors,19 sub-sectors
FOR FINANCIAL ADVISER USE ONLY Source: Dow Jones 31 Jan 2011
Story 1: Commodities DJ UBS Commodities Index
Strong performance of commodities market 2006- 2010 Corn
Oil
Wheat
Silver
2006
+71.05%
-2.97%
+35.33%
+32.33% +29.08%
2007
+19.74%
+59.15%
+87.55%
+17.86% +10.02%
2008
-12.21%
-51.38%
-34.69%
-24.1%
2009
+0.98%
+65.82%
-11.35%
+46.51% +130.72%
2010
+51.33%
+21.27%
+46.46%
+83%
Source: www.ft.com Feb 2011.
FOR FINANCIAL ADVISER USE ONLY
20
Copper
-53.93% +33.3%
Long-term performance of DJ UBS Commodities Index
Source: Aviva Investors to 31 Jan 2011
FOR FINANCIAL ADVISER USE ONLY
It’s all about demand and supply Strong demand:
Limited supply:
•
•
Hard commodities are a finite resource
•
Some metals and fossil fuels are becoming much more difficult, and expensive, to extract
•
Regulations due to environmental concerns are slowing the pace of development in other areas
•
Certain commodities subject to geopolitical risk and weather risk
•
Agricultural commodities - agricultural land being depleted due to long-term global trends such as urbanisation and climate change
• •
Emerging markets particularly India and China are demanding commodities to: o Fuel Infrastructure and manufacturing growth o Feed and cloth their rising and wealthier populations. Inflation protection Gold and other precious metals seen as safe havens during uncertainty
Strong demand + Limited supply = rising prices FOR FINANCIAL ADVISER USE ONLY
Story 2: Eurozone large caps DJ Euro Stoxx 50 Index TR Investment universe covers 50 largest companies in the eurozone by stockmarket capitalisation
FOR FINANCIAL ADVISER USE ONLY
23
Enhancing upside 20 years = 194% Cushioning against downside 5 years =14%
DJ EuroStoxx 50 TR Index – constituent of the Secure Plus Fund For Financial Adviser Use Only
Source: AIB Feb 2011
Top ten holdings – cost of leaving dividends behind Dividend yield
Dividend yield
5.21%
3.76%
2.87%
2.87%
7.93%
6.33% 3.62%
4.1%
4.39%
5.03% Source: FT 28 Feb 2011
FOR FINANCIAL ADVISER USE ONLY
25
Story 3 – Euro denominated corporate bonds Iboxx € Liquid Corporates TR The iBoxx € Liquid Corporates Index offers exposure to the 40 largest and most liquid Euro denominated corporate bonds with investment grade rating. Only bonds with a minimum remaining time to maturity of 1.5 years and a minimum amount outstanding of €750 million are included in the index
Story 3 – Euro denominated blue chip corporate bonds •
Investment vehicle: instruments that track the Iboxx € Liquid Corporates
•
Medium risk element of growth basket
•
Corporate bond yields attractive versus government bonds
•
Underlying conditions remain supportive – low interest rates and subdued inflation
•
Source of diversification • Lower risk than equities • Higher returns than government bonds FOR FINANCIAL ADVISER USE ONLY
Story 3 – Euro denominated blue chip corporate bonds
Source: BlackRock Advisers (UK) Limited 13 April 2011
FOR FINANCIAL ADVISER USE ONLY
Top holdings of well known companies 13 April 2011
FOR FINANCIAL ADVISER USE ONLY
Source: BlackRock Advisers (UK) Limited 15 April 2011
Index performance rebased to 100
13 Feb 2004 = 100
Less volatile than equities, higher returns than government bonds
Source: Aviva Investors Feb 2011
FOR FINANCIAL ADVISER USE ONLY
Positioning the Aviva Irl Protected Growth Fund
•
Provides more certain return outcomes than unprotected exposure to riskier assets
•
Low risk core that can be combined with other asset classes
•
Diversified exposure to uncorrelated asset classes
•
Eliminates fund manager risk
•
Offers more sustainable exposure to riskier areas of the market such as commodities
FOR FINANCIAL ADVISER USE ONLY
© Aviva plc 2009
Current positioning and performance
FOR FINANCIAL ADVISER USE ONLY
Performance of the Protected Growth Fund to 31 March 2011
Source: Aviva Investors 31 March 2011
FOR FINANCIAL ADVISER USE ONLY
Protected growth strongly outperforming cash since launch March 2010 – 13 April 2011 A: Protected Growth
4.08% B:: Cash 0.76%
Source: Financial Express 15 April 2011
FOR FINANCIAL ADVISER USE ONLY
Current positioning
Source: Aviva Investors 31 March 2011
FOR FINANCIAL ADVISER USE ONLY
5 reasons to invest Aviva Irl Protected Growth Fund 1. Price promise aims to provide a downside protection of 80% of the highest ever daily unit price 2. Growth: No cap on the growth potential of the fund 3. Diversification: access to four asset classes with low correlations and different risk-reward characteristics 4. Flexibility: freedom to switch in and out of the fund 5. Availability: available through all actively marketed single and regular investment and pension products and ARFs/AMRFs
Diversified portfolio providing unlimited upside with the comfort of downside protection FOR FINANCIAL ADVISER USE ONLY
Important information WARNING: PAST PERFORMANCE IS NOT A RELIABLE GUIDE TO FUTURE PERFORMANCE. WARNING: THE VALUE OF YOUR INVESTMENT MAY GO DOWN AS WELL AS UP. WARNING: THIS PRODUCT MAY BE AFFECTED BY CHANGES IN CURRENCY EXCHANGE RATES. WARNING: WITHDRAWALS AND SWITCHES FROM FUNDS INVESTING DIRECTLY OR INDIRECTLY IN PROPERTY MAY BE DEFERRED FOR UP TO 6 MONTHS. WARNING: WITHDRAWALS AND SWITCHES FROM ALL OTHER FUNDS MAY BE DEFERRED FOR UP TO 3 MONTHS. Aviva Life & Pensions Ireland Limited, A private company limited by shares. Registered in Ireland No. 252737 Registered Office One Park Place, Hatch Street, Dublin 2. Member of the Irish Insurance Federation. Aviva Life & Pensions Ireland Limited is regulated by the Financial Regulator. Aviva Life & Pensions Ireland Limited is a subsidiary of Aviva Life Holdings Limited, a joint venture company between Aviva Group plc and Allied Irish Banks, p.l.c. www.aviva.ie Telephone calls may be recorded for quality assurance purposes. The information and views contained here in is from Aviva Life & Pensions Limited and mentioned fund managers except where otherwise stated. These views are subject to change at any time based on market and other conditions and there can be no assurances that countries, markets or sectors will perform as expected.
FOR FINANCIAL ADVISER USE ONLY
FOR FINANCIAL ADVISER USE ONLY
Agenda Aviva Irl Protected Growth Fund
•
Your opportunity
•
5 reasons your clients will want to invest
•
How the fund works
•
Strong investment stories
•
Current performance/positioning
•
Place in a portfolio
•
Summary
FOR FINANCIAL ADVISER USE ONLY
Your opportunity Aviva Irl Protected Growth Fund •
Increasingly clients are seeking prosperity and peace of mind
•
The Irish retail market is heavily biased towards cash yet interest rates are falling
Cash deposits Cash funds
Aviva Irl Protected Growth Fund
Conventional Equity/ Property Funds
Your opportunity to offer your clients more: Security + Growth FOR FINANCIAL ADVISER USE ONLY
At a glance
Security
• 80% of highest daily unit price locked in
Unlimited Growth Potential
• No cap on growth potential of the fund • High growth asset classes • Total return of corporate bonds and eurozone equities
High Diversification
1. 2. 3. 4.
Commodities Eurozone large cap companies Corporate bonds Cash
• •
Rising market more exposure to growth component Falling market more exposure to secure component
CPPI Mechanism
FOR FINANCIAL ADVISER USE ONLY
Growth component (initially 80% exposure) Secure component
At a glance Term
Open ended – flexibility to get in and out of the fund at any time.
Availability
Available through all our actively managed investment, savings and pensions products Can be used as part of a diversified portfolio
Risk-reward rating
1
2
3
Low to medium risk Counterparty
FOR FINANCIAL ADVISER USE ONLY
4
5
How the fund works
• The components • Initial asset allocation • Dynamic allocation thereafter • Protected price in action • Back-testing of strategy
FOR FINANCIAL ADVISER USE ONLY
The Aviva Irl Protected Growth Fund
FOR FINANCIAL ADVISER USE ONLY
Initial asset allocation Aviva Irl Protected Growth Fund The Growth Component Secure Component Growth Component
33% Commodities
20%
80%
33% Euro denominated Corporate Bonds 33% Eurozone Large Cap Companies
FOR FINANCIAL ADVISER USE ONLY
Dynamic allocation thereafter Aviva Irl Protected Growth Fund
*The target maximum allocation to the growth component is 80%, however, actual maximum allocation can reach 88%. The target minimum allocation to the secure component is 20%, however, actual minimum can be 12%.
FOR FINANCIAL ADVISER USE ONLY
The Protected Price Promise Aviva Irl Protected Growth Fund
•
Protected price is set at 80% of the highest ever daily unit price of the fund since launch, regardless of investment date
•
As the fund’s unit price increases so does the funds protected price
80% Please see brochure for further details
FOR FINANCIAL ADVISER USE ONLY
Backtesting through rising market April 2003 – April 2007
Protected Growth
Growth Component
Cum Return
30.84%
52.93%
Volatility
5.50%
8.08%
Best Month
2.19%
5.23%
Worst Month
-3.35%
-3.81%
Protected Price
105.41%
Source of back testing – Aviva Investors February 2010. Please see Basis of backtesting at the end of the presentation for further details on the basis of calculation.
FOR FINANCIAL ADVISER USE ONLY
Backtesting through falling market July 2007 – March 2009
Protected Growth
Growth Component
-14.35%
-26.96%
Volatility
6.2%
15.31%
Best Month
2.6%
2.82%
Worst Month
-5%
-9.03%
Cum Return
Protected Price
80.92%
Source of back testing – Aviva Investors February 2010. Please see Basis of backtesting at the end of the presentation for further details on the basis of calculation.
FOR FINANCIAL ADVISER USE ONLY
Backtesting falling then rising January 2001 – January 2006
Protected Growth
Growth Component
Cum Return
6.41%
20.08%
Volatility
5.1%
10.75%
Best Month
4.64%
5.23%
Worst Month
-3.51%
-7.14%
Protected Price
85.19%
Source of back testing – Aviva Investors February 2010. Please see Basis of backtesting at the end of the presentation for further details on the basis of calculation.
FOR FINANCIAL ADVISER USE ONLY
Backtesting rising then falling April 03 – March 09
Protected Growth
Growth Component
15.59%
15.24%
Volatility
5.8%
10.52%
Best Month
3.1%
5.23%
Worst Month
-4.8%
-9.03%
Cum Return
Protected Price
109.35%
Source of back testing – Aviva Investors February 2010. Please see Basis of backtesting at the end of the presentation for further details on the basis of calculation.
FOR FINANCIAL ADVISER USE ONLY
Strong investment stories
•
Secure component - cash funds and cash instruments
•
Diversified exposure to three uncorrelated asset classes with strong growth stories: • Commodities: DJ UBS Commodities Index • Eurozone Large Cap Companies: DJ Euro Stoxx 50 Index Total Return • Euro Denominated Investment Grade Corporate Bonds: Iboxx € Liquid Corporates
• Equal weighting of indices in growth component • Rebalanced at least quarterly
FOR FINANCIAL ADVISER USE ONLY
Asset classes spanning the risk reward spectrum
FOR FINANCIAL ADVISER USE ONLY
Asset classes with low correlations Growth component Asset class correlations hugging 0 Correlation coefficient 04 Jan 99 – 02 Dec 09
+1
No correlation
Perfect positive correlation: Returns both positive and negative of two asset classes move in tandem
+ 0.23 Commodities vs. large cap Eurozone companies -0.06 Corporate bonds and commodities - 0.23 Eurozone corporate bonds vs. large cap Eurozone companies –0.23
0
-1
Perfect negative correlation: returns of two asset classes move by an equal amount in the opposite direction
Source: Aviva Investors January 2010
FOR FINANCIAL ADVISER USE ONLY
Story 1 Commodities
FOR FINANCIAL ADVISER USE ONLY
Diversified exposure 5 sectors,19 sub-sectors
FOR FINANCIAL ADVISER USE ONLY Source: Dow Jones 31 Jan 2011
Story 1: Commodities DJ UBS Commodities Index
Strong performance of commodities market 2006- 2010 Corn
Oil
Wheat
Silver
2006
+71.05%
-2.97%
+35.33%
+32.33% +29.08%
2007
+19.74%
+59.15%
+87.55%
+17.86% +10.02%
2008
-12.21%
-51.38%
-34.69%
-24.1%
2009
+0.98%
+65.82%
-11.35%
+46.51% +130.72%
2010
+51.33%
+21.27%
+46.46%
+83%
Source: www.ft.com Feb 2011.
FOR FINANCIAL ADVISER USE ONLY
20
Copper
-53.93% +33.3%
Long-term performance of DJ UBS Commodities Index
Source: Aviva Investors to 31 Jan 2011
FOR FINANCIAL ADVISER USE ONLY
It’s all about demand and supply Strong demand:
Limited supply:
•
•
Hard commodities are a finite resource
•
Some metals and fossil fuels are becoming much more difficult, and expensive, to extract
•
Regulations due to environmental concerns are slowing the pace of development in other areas
•
Certain commodities subject to geopolitical risk and weather risk
•
Agricultural commodities - agricultural land being depleted due to long-term global trends such as urbanisation and climate change
• •
Emerging markets particularly India and China are demanding commodities to: o Fuel Infrastructure and manufacturing growth o Feed and cloth their rising and wealthier populations. Inflation protection Gold and other precious metals seen as safe havens during uncertainty
Strong demand + Limited supply = rising prices FOR FINANCIAL ADVISER USE ONLY
Story 2: Eurozone large caps DJ Euro Stoxx 50 Index TR Investment universe covers 50 largest companies in the eurozone by stockmarket capitalisation
FOR FINANCIAL ADVISER USE ONLY
23
Enhancing upside 20 years = 194% Cushioning against downside 5 years =14%
DJ EuroStoxx 50 TR Index – constituent of the Secure Plus Fund For Financial Adviser Use Only
Source: AIB Feb 2011
Top ten holdings – cost of leaving dividends behind Dividend yield
Dividend yield
5.21%
3.76%
2.87%
2.87%
7.93%
6.33% 3.62%
4.1%
4.39%
5.03% Source: FT 28 Feb 2011
FOR FINANCIAL ADVISER USE ONLY
25
Story 3 – Euro denominated corporate bonds Iboxx € Liquid Corporates TR The iBoxx € Liquid Corporates Index offers exposure to the 40 largest and most liquid Euro denominated corporate bonds with investment grade rating. Only bonds with a minimum remaining time to maturity of 1.5 years and a minimum amount outstanding of €750 million are included in the index
Story 3 – Euro denominated blue chip corporate bonds •
Investment vehicle: instruments that track the Iboxx € Liquid Corporates
•
Medium risk element of growth basket
•
Corporate bond yields attractive versus government bonds
•
Underlying conditions remain supportive – low interest rates and subdued inflation
•
Source of diversification • Lower risk than equities • Higher returns than government bonds FOR FINANCIAL ADVISER USE ONLY
Story 3 – Euro denominated blue chip corporate bonds
Source: BlackRock Advisers (UK) Limited 13 April 2011
FOR FINANCIAL ADVISER USE ONLY
Top holdings of well known companies 13 April 2011
FOR FINANCIAL ADVISER USE ONLY
Source: BlackRock Advisers (UK) Limited 15 April 2011
Index performance rebased to 100
13 Feb 2004 = 100
Less volatile than equities, higher returns than government bonds
Source: Aviva Investors Feb 2011
FOR FINANCIAL ADVISER USE ONLY
Positioning the Aviva Irl Protected Growth Fund
•
Provides more certain return outcomes than unprotected exposure to riskier assets
•
Low risk core that can be combined with other asset classes
•
Diversified exposure to uncorrelated asset classes
•
Eliminates fund manager risk
•
Offers more sustainable exposure to riskier areas of the market such as commodities
FOR FINANCIAL ADVISER USE ONLY
© Aviva plc 2009
Current positioning and performance
FOR FINANCIAL ADVISER USE ONLY
Performance of the Protected Growth Fund to 31 March 2011
Source: Aviva Investors 31 March 2011
FOR FINANCIAL ADVISER USE ONLY
Protected growth strongly outperforming cash since launch March 2010 – 13 April 2011 A: Protected Growth
4.08% B:: Cash 0.76%
Source: Financial Express 15 April 2011
FOR FINANCIAL ADVISER USE ONLY
Current positioning
Source: Aviva Investors 31 March 2011
FOR FINANCIAL ADVISER USE ONLY
5 reasons to invest Aviva Irl Protected Growth Fund 1. Price promise aims to provide a downside protection of 80% of the highest ever daily unit price 2. Growth: No cap on the growth potential of the fund 3. Diversification: access to four asset classes with low correlations and different risk-reward characteristics 4. Flexibility: freedom to switch in and out of the fund 5. Availability: available through all actively marketed single and regular investment and pension products and ARFs/AMRFs
Diversified portfolio providing unlimited upside with the comfort of downside protection FOR FINANCIAL ADVISER USE ONLY
Important information WARNING: PAST PERFORMANCE IS NOT A RELIABLE GUIDE TO FUTURE PERFORMANCE. WARNING: THE VALUE OF YOUR INVESTMENT MAY GO DOWN AS WELL AS UP. WARNING: THIS PRODUCT MAY BE AFFECTED BY CHANGES IN CURRENCY EXCHANGE RATES. WARNING: WITHDRAWALS AND SWITCHES FROM FUNDS INVESTING DIRECTLY OR INDIRECTLY IN PROPERTY MAY BE DEFERRED FOR UP TO 6 MONTHS. WARNING: WITHDRAWALS AND SWITCHES FROM ALL OTHER FUNDS MAY BE DEFERRED FOR UP TO 3 MONTHS. Aviva Life & Pensions Ireland Limited, A private company limited by shares. Registered in Ireland No. 252737 Registered Office One Park Place, Hatch Street, Dublin 2. Member of the Irish Insurance Federation. Aviva Life & Pensions Ireland Limited is regulated by the Financial Regulator. Aviva Life & Pensions Ireland Limited is a subsidiary of Aviva Life Holdings Limited, a joint venture company between Aviva Group plc and Allied Irish Banks, p.l.c. www.aviva.ie Telephone calls may be recorded for quality assurance purposes. The information and views contained here in is from Aviva Life & Pensions Limited and mentioned fund managers except where otherwise stated. These views are subject to change at any time based on market and other conditions and there can be no assurances that countries, markets or sectors will perform as expected.
FOR FINANCIAL ADVISER USE ONLY
