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View the article online at http://citywire.co.uk/wealth-manager/article/a761150

Gars in their eyes: the challengers coming after the SLI giant

by Eleanor Lawrie on Jul 10, 2014 at 07:15

The challenger: Aviva is to launch three-strong absolute return target fund range, run by Peter Fitzgerald and Daniel James and overseen by Euan Munro.

The range will comprise: Multi-strategy Target return fund: will target Libor plus 5%, focusing on three buckets. These are market returns, for example, positions that make money on a two or three-year view; risk-reducing returns; and opportunistic returns.

Target Income fund: target return 4-6% pa

Target Inflation fund: target return CPI+ 3%


Gavin Haynes, managing director at Whitechurch Securities, is doubtful Aviva will hit its targets any time soon.

‘I think it’s ambitious. We have already seen the highest profile retail fund launch with Neil Woodford this year. The fact is that he got £2 billion with what is a mainstream asset class, which means I would not expect it to take anything like that in the early days, but it depends on institutional demand.

‘Obviously Gars is a fund used by pensions and it is primarily institutional demand where the money would come from.’

Gars recently acknowledged it could not guarantee hitting its return target this year. Haynes expects that if the strategy failed to hit its objectives over the long term, it could lose some assets to competitors as investors seek to diversify their absolute return exposure.

Keep it nimble

Bestinvest equity analyst Rob Harley said that while the firm has Gars on its recommended list, would-be challengers could offer a more nimble approach to absolute return.

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