Aviva Investors has announced the launch of a sustainable income and growth fund for investors planning their retirement.
The fund will invest in a portfolio of between 80 to 120 securities from names in MSCI’s All Country World index and Bloomberg’s Barclays Global Aggregate Bond index, which will be selected according to sustainable business criteria.
The company named Francois de Bruin as the lead fund manager on the fund. Mr De Bruin will work with the investment team to improve the sustainability of issuers in the portfolio, through its stewardship programme of engagement and proxy voting.
"Companies will be selected on the basis of sustainable business models and underlying revenue streams, with an emphasis on cash flows to deliver compounding interest over time," he said.
"By focusing on assets likely to generate dividends and coupons during drawdown, rather than selling shares for income, the fund will help mitigate the risk of permanent loss of capital when markets are depressed."
Mr De Bruin’s supporting team includes Mirza Baig, Aviva Investors’ head of governance, Anton Kerkenezov, an emerging market debt fund manager, and Cyril Martin, head of Aviva Insurance Solutions.
"In our discussions with clients, there are two themes that always inform the conversation: the need for sustainable income that can be delivered smoothly over the long-term and investing with a responsible focus," explained TJ Voskamp, the company’s global head of wholesale.
"This new fund looks to achieve both and draws on the combined experience of cross-asset investment professionals."
Laura Suter, a personal finance analyst at investment platform AJ Bell, told FTAdviser there is a clear demand for funds delivering consistent income, whether from people looking to fund their retirement or just looking for an income boost during their working life.
She added: "However, the market has a number of established names with proven track records, making this a hard space for new entrants to break into until they have meaningful performance track record."
Ms Suter also said: "There’s a real pick-up in demand for ESG funds at the moment, meaning more fund launches in this area, but sticking a label on a fund doesn’t guarantee an investment approach aligned with an investor’s views.
"Instead everyone needs to dig deeper and ask thorough questions of the fund management group on how they will incorporate sustainable investing into their processes, or whether they are just paying lip-service to it."
