Investment process

Aviva Investors seeks to customize investment solutions to the client's objectives, including income/return objectives, liability characteristics and risk parameters. Those objectives are the foundation for our five-phase investment process:

Investment Environment

We develop a forward-looking view through a forecast of the investment environment, based on key economic indicators. Risk scenarios are created as part of this forecast.

Investment Strategy

Using the investment environment forecast as a backdrop, we create an investment strategy to meet the defined client objectives. The strategy is based on an assessment of Fundamentals, Technicals and Valuations (FTV), which we call the FTV framework. This phase helps formulate the expectations for asset classes, sectors and securities. Learn more about our FTV framework and research process.

Portfolio Construction

A combination of a top-down and bottom-up approaches then leads to portfolio construction:

• Portfolio management uses a top-down approach based on the investment strategy, which identifies asset classes and securities that should benefit most from the investment forecast.
• The research team uses a bottom-up approach based on the FTV framework. The universe of potential securities is narrowed by assessing relative value, quality, and liquidity to identify potential candidates for investment.

This combination of top-down and bottom-up approaches results in a final portfolio constructed from alpha generators with corresponding exit strategies.

Monitoring and Control

We apply active management within a risk-controlled framework to monitor the portfolio. It is continuously checked for deviations from the targeted risk level using tools such as momentum signals, credit signals, tracking error volatility and scenario analysis.

Performance Analysis

Finally, we closely review performance in order to measure the alpha generators in the portfolios. Alpha generators represent outperformance of an investment strategy compared to a designated benchmark. They are analyzed in light of past investment environments, themes and strategies in the portfolio. We also use attribution analysis to explain expected alpha generators, including asset class selection, sector allocation, credit quality, duration and yield curve.