Aviva Investors is planning to shut its Multi-Strategy Target Income fund following a brutal period of redemptions this year.
The asset manager told Portfolio Adviser “performance challenges have made it difficult for the fund to gain traction commercially and retain existing clients”.
On a three-year view the fund, run by Peter Fitzgerald (pictured) and Ahmed Behdenna, managed to return just 0.3% compared to the IA Targeted Absolute Return sector’s 7.0% average and over five years it has lost investors 2.9% while the sector is up 11%.
Its objective is to deliver an annual income yield of 4% above the Bank of England base rate before tax “regardless of the prevailing market condition”.
The fund suffered outflows amid the coronavirus pandemic in 2020 with investors pulling £99m or around 8% of its total assets, which tumbled from £1.2bn in January to £1bn in December, data from Morningstar shows.
However this year redemptions have been punishing, with the fund leaking £568m in the seven months to July. The worst month was in January when a whopping £465m exited the strategy, slicing the fund in halve to £533m. At the end of July it had just £418.7m in assets.
Aviva says Target Return remains a ‘key focus’
Aviva said the decision to shutter AIMS Target Income fund would enable the portfolio management team to concentrate on the remaining AIMS Target Return fund.
Though the fund, which was set up by the brains behind Abrdn’s Gars fund Euan Munro, has suffered from its own spell of disappointing performance, Aviva noted that in the last two years the situation has improved.
AIMS Target Return is up 6.8% and 6.9% over three and five years respectively, according to FE Fundinfo, which is still below the IA Targeted Absolute Return sector average.
“The fund has always been the key flagship multi-strategy proposition and currently holds £5bn in assets under management, a level that has held fairly stable over the past year,” Aviva said in a statement.
“We believe there is a strong client and commercial rationale for liquid alternative strategies, both in the discretionary wealth and the pensions market.”
The wind-up of AIMS Target Income follows hot on the heels of the closure of Aviva’s £367m UK Property fund.
