Smooth Managed Funds

“No one needs reminding that we’re going through a period of uncertainty right now. You might be worried about the effects of sudden drops in the stock market and looking for a safer place for your money than shares.

At Aviva we understand that there are times in your life when you need some certainty regarding your hard-earned cash. Times when you don’t have decades to weather the ups and downs of the stock markets - in the run-up to retirement, for example. Or once you’ve retired and are starting to use the money you’ve saved. On such occasions you might be looking for the reassurance of smoother returns.

That’s why we created the Aviva Smooth Managed Funds. Designed to deliver growth over the medium to long term, they still allow you to invest in the stock market but using a smoothing process to shelter you from some of the ups and downs.

The Smooth Managed Funds are available through Pension Portfolio and ISA Portfolio which are both available through the Aviva Platform and the Select Investment Bond. There are two funds in the range with different levels of risk: The Aviva Smooth Managed Fund, for customers who are prepared to take a medium degree of risk with their investment, or the Aviva Smooth Managed Fund 2, for customers who are prepared to take a low to medium degree of risk.

When you invest in an Aviva Smooth Managed Fund, your money is pooled together with that of other investors. This creates a bigger fund, which is then spread between different types of investments, like shares, bonds and properties- we call these “assets”.

Different assets tend to behave differently depending on what is happening in the world and in stock markets. For example, shares might go up in value, while bonds may be dropping. If this happened, someone who invested only in bonds would be at risk of bigger losses than someone whose investments were spread across a mix of different assets.

In fact, the Aviva Smooth Managed Funds spread that risk even further, by using assets from around the world including the US, Europe and Asia.

The Funds use a smoothing process which is designed to protect you from the short-term ups and downs you could see if you were investing directly in the stock markets.

In this graph the red line shows the value of all of the investments in the Smooth Managed Fund. You can see how the value can go up and down on a daily basis. Think of this as the “unsmoothed” value of the fund. If we didn’t use smoothing, you would see the value of your investment go up and down each day in the same way this line does.

Now let’s add the blue line, which shows how smoothing works. Smoothing aims to flatten out those ups and downs, so that you can see your investment growing smoothly, in line with a “Smooth Growth Rate.” So you won’t see your value go up as much as the unsmoothed investment when it rises, and you won’t see it drop as much when it falls.

If the difference between the smooth price and the unsmoothed price is too much on any day then we need to make an adjustment to bring the values closer together. This helps to make sure that anyone leaving the fund at this point won’t be getting too much or too little.

We’ve seen how the Aviva Smooth Managed Funds can help to give you some reassurance and certainty during these uncertain times by:

•       Pooling your money into a larger fund with other investors

•       Investing in different types of assets to spread risk

•       Smoothing the returns to protect your investment from some of the stock market ups and downs.

Price changes can happen at any time. The value of an investment can go down as well as up. The fund is not guaranteed to grow in line with the Smooth Growth Rate and may return more or less than this over any time period.

For more information about the Smooth Managed Funds please speak to your financial adviser”

Aviva Life & Pensions UK Limited. Registered in England No 3253947. Aviva, Wellington Row, York, YO90 1WR. Authorised by the Prudential Regulation Authority and regulated by the Financial Conduct Authority and the Prudential Regulation Authority. Firm Reference Number 185896. Member of the Association of British Insurers.

IN13237 12/2022

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