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Asset classes

Separating alpha and beta

The chart illustrates how beta is separated from alpha, so these exposures can be changed independently of each other. We have eight main potential sources of investment ideas, comprising the eight alpha sources.

Diversifying alpha sources

GMA draws on the expertise of Aviva Investors’ fixed income managers in Europe, North America and Asia. This provides a diverse range of investment ideas in sovereign debt, credit, high yield, emerging market debt, currencies and quantitative strategies.

Individual teams

Each alpha team has its own investment strategy and style, and they are not required to follow any overarching house macro policy. Clients benefit from diversification across multiple dimensions: security selection, asset classes, geographic regions, sectors, manager styles, quantitative and qualitative approaches, and time horizons.

Freedom to perform

The core of the GMA process is our risk-budgeting framework. This orchestrates the portfolio exposures to create the desired level of risk and return and ensure that exposures remain appropriate for the prevailing market conditions. Risk budgeting assigns risk to alpha pods, who supply investment ideas to fulfil these budgets. Directionality at the overall portfolio level, can be managed efficiently through derivatives without interfering with our alpha pods’ individual investment processes. In this way our alpha pods are free to focus on what they do best – producing unconstrained trade ideas in their specific areas of expertise.