The LTAF will start with almost £150m from Aviva in a mix of assets and cash and will have no fixed lifespan. It will invest with a UK bias in Europe and North America across fintech and insurtech, healthtech, science and technology, and climate and sustainability.

Aviva has targeted an overall return of 15% per year on a five-year rolling basis. It will make its venture investments through third-party funds and other evergreen vehicles.

Dame Amanda Blanc, group CEO at Aviva, said: “Aviva is investing more and more in the UK, to support growth and back Britain’s flourishing early-stage companies. This new fund will provide vital finance to some of the UK’s most promising, high-growth businesses, aiming to deliver great returns for our customers.”

This will be the fourth LTAF launched by Aviva, following the Multi-Sector Private Debt LTAF in November.

See also: PA Live A World Of Higher Inflation 2025

Mark Versey, chief executive officer at Aviva Investors, said: “This fund marks another step in our ambition to unlock the benefits of Private Markets for more investors, and to be the go-to provider for the UK’s DC and Wealth markets. We are incredibly pleased to expand our LTAF range further, making it easier for investors to allocate more to these asset classes and to enjoy the returns and diversification they can offer.

“Targeting venture returns, we expect our new fund to help the companies of tomorrow get ready for the future, driving innovation and growth through investments that also have the potential to have a positive societal and environmental impact.”

The regulator is consulting on plans to introduce a single standard for corporate bond prospectuses, which would cover issuances of any size.

According to the FCA, this would reduce costs and barriers for companies raising capital while providing investors the information they need to make an informed decision, the regulator said.

The proposals aim to encourage listed companies to offer bonds in smaller sizes, improving investment opportunities for wealth managers and retail investors.

Meanwhile, the regulator has also proposed a simplification of requirements that apply to listed companies when they issue further shares.

“We’re opening the door for corporates to issue bonds in small sizes so that a wider range of investors can invest in them. That’s more funding for companies, more easily, and more choice for investors too,” said Simon Walls, interim executive director of markets at the FCA. 

“We want to make sure investors have the information they need to make informed decisions about risk while removing unnecessary costs and widening access.” 

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Reaction

Investor Access to Regulated Bonds (IARB), an industry working group sponsored by the London Stock Exchange, has advocated for increased retail and wealth investor access to bonds.

Commenting on the proposals, IARB chair Stacey Parsons said: “Change can only be achieved with the modernisation of both regulation and historic market practices. Today’s consultation from the UK Regulator allows exactly that.

“Offering industry stakeholders the opportunity to support a simplified and renewed regime removing complexities and delivering broader investor participation to the largest capital market in the world: Bonds. It is critical we support these changes, alongside the right education and guard rails for investors.”

See also: Is it time to re-consider thriving China funds amid their rally?

Michael Smith, head of debt capital markets at Winterflood, added: “It’s important that the proposals give issuers choice. Issuers can continue to use high denominations if they want to – but the incentive to do so, which has driven the market to favour high denomination wholesale-only bonds, is being removed. If the disclosure regime is the same irrespective of the denomination, surely, using a lower denomination makes sense because this gives you a bigger primary and secondary market. This is additive demand too.

“If an issuer really wants to restrict retail access, it can, it will select a high denomination.  I anticipate this will be the case whilst advisors and issuers observe what their peers do.  But I look at the corporate bonds that have been issued over the last few years and I just don’t see many that wealth managers and even individuals wouldn’t want to be restricted on.

“Using credit ratings as a proxy for risk, bonds listed in the UK are predominantly investment grade. Investment grade doesn’t mean risk free but if you’re going to expose retail to bonds, this is precisely where you start.  So, we are fully supportive of what the FCA is doing here.  Retail had access to bonds before 2005, so it’s not like we’re breaking new ground.”

The Invesco S&P 500 CTB Net Zero Pathway ESG UCITS ETF, which is an Article 8 fund under SFDR, charges 0.09% a year.

The Invesco ETF will seek to replicate the S&P 500 Climate Transition Base Pathway-Aligned ESG Index, which excludes securities that are involved in tobacco, controversial weapons, oil sands, small arms, military contracting or thermal coal; do not comply to the UN Global Compact principles; or are not covered by the index provider’s ESG data solution.

Using this methodology, the ETF aims to mitigate climate risks and provide greater exposure to opportunities in the transition towards decarbonisation.

See also: US bond market to ‘stay under pressure’ as US Federal Reserve holds rates

Gary Buxton, head of EMEA ETFs and indexed strategies at Invesco, said: “Many investors who want to include climate-related objectives in their portfolios also want similar performance to standard benchmarks.

“These two aims can be at odds with each other, so investors need to understand what they want to achieve personally with their investment and the acceptable level of deviation from the benchmark.

“We believe our new ETF offers investors the potential for closer tracking and a more representative path towards decarbonisation.”

Over a quarter of specialist funds earned a five-crown rating, while the US struggled with just 2.6% achieving the position. This difficulty for active managers was likely due to the dominance of the magnificent seven in this market.

See also: Is it time to re-consider thriving China funds amid their rally?

FE fundinfo recognised the success of managers with a valuation focus in the current environment. Artemis earned seven five-crown ratings in the rebalance, up from five in June, while Invesco earned 14, up from 10 in June.

By percentage of funds, Man Group topped the table with 41.7% of funds earning a five-crown rating, following by Aegon at 38.5% and Artemis at 31.8%.

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Charles Younes, deputy chief investment officer at FE fundinfo, said: “Inflation remained persistently above target in the second half of 2024, compelling central banks to maintain restrictive policies, while portfolios with high-interest rate sensitivity faced another difficult six months. 

“Against this backdrop, funds such as Man Group’s Sterling Corporate Bond Fund and Royal London Global Equity Select Fund delivered exceptional performances. Both achieved 5-star Crown ratings for their ability to deliver consistent returns for investors and maintain foresight in volatile economic environments.” 

The products will include the iShares Nasdaq 100 Top 30 UCITS ETF, which has holdings in the 30 largest companies, while the iShares Nasdaq 100 ex-Top 30 UCITS ETF will encapsulate the other 70 stocks in the Nasdaq 100.

See also: BlackRock enters pact with Saba to ‘not seek to control or influence the board’

While the Top 30 is aimed at exposure to some of the largest tech companies, targeting market leaders, the ex-Top 30 will offer a less volatile exposure with more diversification from tech. Both funds will have an expense ratio of 0.3% and are listed on Euronext Amsterdam.

The ETFs follow the launch of the iShares S&P 500 Top 20 UCITS ETF in late 2024. BlackRock also expanded its active ETF range for Europe this January.

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Manuela Sperandeo, head of Europe & Middle East iShares product at BlackRock, said: “European investors can now use iShares ETFs to access both the S&P 500 and the Nasdaq-100 with precision, enabling them to easily customise their portfolios and capitalise on growth potential whilst maintaining diversification.”

Martin Currie’s UK investment and sustainability teams will move to Franklin Templeton’s ClearBridge brand, while its global long term unconstrained team will move under Franklin Equity Group.

The firm’s Australia and global emerging markets teams will also fall under the Clearbridge umbrella.

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In a statement, Franklin Templeton confirmed that no changes would be made to Martin Currie’s investment process or portfolio management teams, while the move would ‘maintain investment autonomy’ and allow the brand’s products to ‘achieve greater scale’ and ‘access to broader resources’.

Martin Currie, which was founded in 1888, operated independently until its acquisition by Legg Mason in 2014. Franklin Templeton then took ownership of the brand following its acquisition of Legg Mason in 2020.

Globally, the brand’s investment teams currently manage $18bn (£14.5bn) assets.

See also: Evelyn Partners sells fund solutions business to Thesis

Managed by Stephanie Niven (pictured) and Miles Hamilton, the fund is billed as a high-conviction, concentrated global equity portfolio that aims to invest in businesses with sustainable drivers of structural growth, competitive advantages, and that are generating sustainable returns, underpinning a multi-decade move towards a more sustainable future.

The structural growth opportunity set spans decarbonisation, financial and digital inclusion, healthcare impact, climate adaptation and water and pollution management, and access to education.

Also read: Ninety One UK Sustainable Equity fund to merge with global mandate

Co-portfolio manager, Niven, said: “As an active, global investment manager, Ninety One strives to invest for a better tomorrow. We believe that the effects a company has on its wider stakeholders, inclusive of society, the environment and its employees, will be increasingly recognised by the financial markets over the longer term.  Moreover, we continue to see sustainability creating a wide and growing opportunity set for active, concentrated investors.

“The decade ahead will be critical for addressing a broad range of sustainability challenges, presenting investors with significant potential to both generate returns and invest in companies contributing to positive social and environmental outcomes. The adoption of the ‘Sustainability Impact’ label by the Global Sustainable Equity Fund underscores our commitment to addressing the sustainability challenges in the years to come.”

Ninety One added it will be writing to the fund’s shareholders soon with details of the updates to the prospectus, which are being made to align the relevant disclosures with the SDR regime.

This story originated on our sister title, PA Future.

The First Trust Vest U.S. Equity Buffer UCITS ETF – January will aim to match the price return of the S&P 500 up to a predetermined upside cap, while providing a 10% downside cushion through a built-in buffer mechanism.

The cap and buffer will be reset after a year in January 2026 to match market conditions. The ETF charges a 0.85% total expense ratio.

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Rupert Haddon, managing director at First Trust Global Portfolios, said: “FJAN represents the first ETF in our quarterly series of scheduled UCITS ETFs for our S&P 500 Target Outcome 10% buffer suite.

“In today’s volatile market environment, we believe FJAN offers a compelling solution for investors seeking exposure to leading S&P 500 companies while managing downside risk.”

The strategy will act as a complement to more traditional portfolios, and begins with near $100m. It will invest across the liquid multi-asset universe, taking long and short positions.

See also: BlackRock enters pact with Saba to ‘not seek to control or influence the board’

LOIM’s DOM Global Macro team is made up of five people and led by Valentin Petrescou and Didier Anthamatten. The team collectively transferred from Credit Suisse to LOIM, where they managed two multi-asset investment strategies.

Jean-Pascal Porcherot, co-head of LOIM, said: “At LOIM, we have deep partnerships with our clients and help them to precisely manage the risks and opportunities that arise across market cycles.

“With the launch of DOM Global Macro, clients benefit from the team’s extensive expertise managing multi-asset macro strategies that target absolute returns. The launch is an important milestone in strengthening LOIM’s alternatives business, as we expand our range of differentiated strategies that seek to create sustainable value for clients.”

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Instead, the portfolios will operate on a combination of equity, cash and bond allocations. Particularly, this year will see a lift in non-GBP equities and an uptick in GBP cash & bonds.

Ryan Hughes (pictured), managing director at AJ Bell Investments, told Portfolio Adviser: “We’ve had a very good look at this alternatives space and the types of assets that we consider to be investable, and ultimately, we concluded they are not adding to the portfolios, and therefore they shouldn’t be there.

“We understand there are lots of people out there that use different flavours of alternatives, but we have a very particular approach to that has to be available actively and passively, which rules out a lot. The simple, transparent, low cost, that rules out a lot more. We’ve also seen a lot of this stuff go very wrong over the years. It’s great while it works, and then it doesn’t. (It’s) in your portfolio to provide you the protection when your equities aren’t doing so well, and the alternative should step in, but in reality, it just doesn’t work like that.”

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Where, then, will the team find their diversifiers in 2025? In this case, the simple answer is the right one to the AJ Bell team.

“It’s nice and straightforward. It’s cash. You can get a return of 5% today from money market funds and cash. Do you actually need to look to alternatives to provide that low risk, uncorrelated return when you have got a great standing start from a very low risk asset?” Hughes said.

“People generally have been reaching into the alternative space, either when there’s been very low returns on cash available, or when they got concerned about fixed interest. At the moment, only one of those is probably true, which is the risk around fixed interest and where we go from here with inflation. But if you’ve got a standing start of roughly 5% from your cash for a low risk investor, bag the easy money. Over the years, a lot of people try and over-complicate it. Sometimes the right answer is staring you in the face, and it’s the simplest one.”

In the last financial year, AJ Bell Investments grew by 45% to £6.8bn in assets under management, including £1.5bn in inflows. Its yearly strategic asset allocation begins by using a mean variance optimiser to create portfolios near the efficient frontier. The AJ Bell team then makes tactical adjustments to account for market context.

The MPS options include both active and passive versions, as well as a blended version. Notably, 2024 saw the active MPS outperform the passive version for the second year in a row.

“I’m not sitting here saying I’m beating the drum for active management,” Hughes said. “But I think what it is showing is that there is pockets of the market where active management can do well and that careful manager selection can be beneficial to that.”

US equities

AJ Bell Investments will up its allocation to US equities across all risk profiles, with the highest increase to its risk level three at 11%. In overall allocation, risk level one will have the smallest holding in US equities at 12%, with the highest at risk level four with 25%.

The decision is a reversal from 2024’s strategic asset allocation, where the team opted to take down the allocations to US equities. However, across the last year, the S&P 500 continued to climb over 26%.

As AJ Bell increases its allocation however, it proceeds with guardrails. It will introduce equal-weight products instead of simply market-cap products to protect against some of the concentration risks in the market.

James Flintoft, head of investment solutions, said: “We’re bringing in the equal weight to cushion that allocation, to make sure we’ve got the right time for diversification. The concentration is at a record high. Who knows how far it’s going to go? If you look at the top 20, that’s now 40% of the index, the top 10 is 37%, and the top three is over 20%.”

China allocation

Following the macroeconomic conditions of the past few years, the team also took a closer look at how China should play into its portfolio, not just in its allocation, but how it is viewed as an asset class.

Previously, China was placed within AJ Bell’s emerging markets and Asia Pacific ex-Japan categorisations. But in recent years, it has become clear to the team that the category is not necessarily reflective of where China sits. Instead, it has now been positioned as its own asset allocation.

While the move to separate China has been on the minds of the team for a while, it was not made possible until more recently as ETF products diversified. Now, the team feels there are enough individual China products, as well as emerging markets ex-Japan and ex-China products, to allow them to sit independently.

“This has been a really hot topic over the last couple of years that people want flexibility in their portfolios to dial up and down China exposure. We don’t have at this point a really specific view on China, but we’ve got the lever there should we need it. So we’ve put that as a standalone holding, whereas previously, if we wanted to do something very specific with China, it was very difficult to do,” Flintoft said.

Bonds

In the team’s 2024 allocation, the team found frustration in the performance of bonds, particularly when it came to the low risk end and the performance of US treasuries as markets went through a series of re-pricings on interest rates.

See also: ‘Strap in’: Trump returns to questions on tariffs and inflation

“That’s something that we can sit here today and say, ‘hands up, a year ago, we got that wrong’,” Hughes said.

“We thought that there would be more interest rate cuts than there have been, and I don’t think we’re alone in that position. We had lots of conversations with managers saying that they expected plenty of rate cuts, and they haven’t come through. That’s definitely been painful for us at the lower risk end.”

The surprisingly sticky inflation and higher interest rates have led AJ Bell to cut a significant amount of its exposure to non-GBP cash & bonds. The lowest level of risk now has an exposure of just 9% to the sector, with the highest risk having none.

Last year also presented surprises in the success of high yield, which AJ Bell had decreased its exposure to in 2024.

“We didn’t have enough high yield. We took high yield down a little bit last year and allocated that to investment grade. We were concerned about spread levels last year, because we thought they were pretty tight. They just got a whole lot tighter,” Hughes said.

Looking ahead

For 2025, the AJ Bell team predicts an average case one-year return of 5% for its lowest risk portfolio, and 7.5% for its highest risk portfolio. But the team emphasises that while it’s pleasant to have a high return, it is also important to deliver that return in the right way, and in a comfortable way for investors.

“We’ve all been on plenty of flights, and there are certain people that when the captain says fasten your seat belt signs, they absolutely panic. I’m one that grips the seat and the knuckles go white and I can’t stand any kind of turbulence. There are other people that are blissfully unaware and just sleep all the way through it,” Hughes said.

“That is exactly the same with markets. What we need to make sure is that those people that are in our lower risk funds, that want to grip the seat every time there’s a bit of market noise, they actually can be comfortable and still reach their destination. To the same point, we need to make sure that those people that are happy to sleep through all those lumps and bumps while the seat belt sign is on still reach the destination have the right kind of experience too.”

The iShares AI Innovation Active UCITS ETF is a relatively concentrated “best ideas” portfolio of 20-40 stocks, targeting exposure across the entire AI value chain.

It follows the same investment strategy as the BGF AI Innovation fund, which launched in December 2024. The strategy, which charges a 0.73% Total Expense Ratio, will be managed by Tony Kim and Reid Menge.

The firm has also announced the launch of the iShares World Equity Factor Rotation UCITS ETF. The strategy aims to outperform the broad global equity market by tactically allocating to “historically rewarded” factors.

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The strategy will house between 150-250 holdings and charges a 0.30% TER. It is managed by Philip Hodges, PhD, BlackRock’s head of investments for factors and senior portfolio manager He Ren.

Jane Sloan, EMEA head of global product solutions at BlackRock, said: “With the addition of these funds, BlackRock is able to offer European investors active ETFs across both systematic and fundamental investment strategies.

“The launch of an active ETF as part of our existing AI suite provides clients the choice to tailor their exposure using the wrappers that work best for them.”

Managed by sustainable investing fund managers Fiona Manning and William Scholes (both pictured), the fund was launched in April 2023 with a dual objective to deliver capital appreciation as well as measurable positive environmental and societal outcomes. The team’s differentiated investment strategy and research process look to identify companies that are enabling positive change in emerging markets.

Commenting on the announcement, Manning said: “We are delighted to be coming into 2025 having achieved two key milestones for the fund – the publication of our first Sustainability Report since the fund’s launch and the planned adoption of the FCA’s Sustainability Impact label.

“The measurement of impact is complex and still evolving. We are committed to working with companies and data partners to drive forward the measurement and delivery of positive impact in emerging markets. We will always be transparent about the challenges we face and will work to improve investor understanding of dual outcome sustainable products such as ours.”

Co-fund manager Scholes added: “Fiona and I are dedicated to finding those companies that we believe can help address unmet needs, solve a problem or push forward a global technological frontier. Our aim is to deliver strong returns for investors without compromising on franchise quality and draw more capital into long term investment in countries where it will go furthest towards achieving the ambitions of the United Nations’ Sustainable Development Goals.”

This story originated on our sister title, PA Future