Aviva has launched its competitor to PruFunds with its Smooth Managed Fund with a growth rate target of 5% above Bank of England (BoE) base rates.
In June New Model Adviser® revealed Aviva was gearing up to launch a rival to the PruFunds which use the with-profits format providing regular bonuses for investors which hold back growth in positive years to try and smooth out market volatility.
Now Aviva has released this rival fund which will be managed by Aviva Investors and will be on the Aviva adviser platform. Aviva said the fund is suitable for investors in income drawdown to try and manage volatility.
Just like the PruFunds range, the Aviva Smooth Managed Fund pools investors’ money together and uses a wide range of asset classes.
The benchmark holdings for the fund are 52.8% overseas equities, 24.7% bonds, 7.5% target return, 5.5% property, 5% cash and 4.5% UK equities.
There is a 0.65% annual management charge and switches in and out are limited to each calendar quarter.
The fund also uses a smooth managed format just like the PruFunds. There is a smooth growth rate which Aviva said will never be less than 5% or more than 10%.
If there is a difference of more than 6.5% between the smoothed price and the value of the underlying assets then there is an adjustment to the smoothed price to bring it in line within 1.5% of the value of the underlying assets.
‘In simple terms, we smooth out some of the ups and downs of typical stock market investing, but there may be times when we have to adjust the price of the fund to bring it more in line with the value of assets to ensure we’re offering you a fair price,’ Aviva said in an investor document.
Tim Orton, chief executive of the Aviva platform, said: ‘We’re launching the Smooth Managed Fund today in response to adviser and customer demands for investments that have scope to deliver better than cash returns but with fewer of the ups and downs that are usually associated with more traditional investments.
‘Pensions Freedoms continues to see people taking more control over their later life finances and this fund is targeted at clients who want to remain invested leading up to and in retirement but see a steadier return on their investment.’