Asset classes

Our philosophy

The private equity ownership model can offer significant benefits over public ownership
We believe the enhanced governance model and superior alignment of interests, combined with active ownership, should translate to enhanced returns over public equities. At the same time, we understand that achieving these enhanced returns is entirely dependent on both the quality and the experience of the people involved.

Investment selection is the critical consideration within the asset class
In aggregate, private equity returns have historically provided inadequate compensation for the associated loss of liquidity, with a high degree of returns dispersion existing across individual funds and stages of investment. However, we believe that a disciplined, considered, and rigorous investment programme can identify top performing funds with the degree of consistency that our clients require.

Diversification should be achieved in such a way as to maximise our ability to outperform, whilst at the same time avoiding any unnecessary concentrations or over-diversification
We believe that a fund-of-funds can achieve a sufficient portfolio diversification whilst limiting investments to 8-12 primary funds within any given vintage year. As each primary fund normally invests in >10 companies this creates economic exposure to >80 companies in the fund-of-funds portfolio (more than enough to ensure sufficient diversification across geography, sector, and investment stage). 

Investment selection is only a part of the process
We attach great value and importance in engaging with our General Partners and in managing our investments all the way through to realisation. Typically it takes ten years or more to achieve this. To facilitate effective monitoring, we are represented in approximately half of the advisory/observer boards of all of the funds in which Aviva Investors is currently invested.

Secondary and co-investment opportunities can represent attractive sources of return enhancement and add flexibility to portfolio management, but need to be approached with a high degree of caution. It is critical that we have a complete understanding of all of the potential risk factors present in achieving the prospective returns, as well as a high degree of conviction on any investment decision and an understanding what the investment will add to the overall portfolio.

Our reputation and industry relationships are key assets
These assets have been built up progressively over a long period of time and are critical to our future success.