Aviva Alternative Funds celebrated its first anniversary in July 2004 by posting a positive return for the 12th consecutive month since launch.
Aviva Alternative Funds comprises Alpha Optimum, the Luxembourg-domiciled fund of hedge funds of the Aviva Group. Designed to produce steady returns independent of the movements in equity or fixed income markets, Alpha Optimum aims to provide high alpha through the skills of the managers of the funds selected, and a beta of 0, by hedging out all of the market risk. Against a backdrop of continuing volatility for long-only investors and for the hedge fund industry in general, Alpha Optimum has produced returns in Euro of 7.9% over the 12 month period to 30 June 2004.
Commenting on the fund's performance, Neil Smith, Head of Alternative Investment at Morley Fund Management, the Investment Advisor to Aviva Alternative Funds, said: "Alpha Optimum has delivered what we fully expected of it - a truly diversified market neutral fund that is delivering performance at a time when many other funds of hedge funds are delivering very modest or even negative returns."
Total hedge fund assets in the UK and continental Europe have increased substantially in the last year, with institutional investors replacing high net worth individuals as the main driver of growth. Concerned by the performance of global equities during the last six years, institutional investors, particularly pension funds, have looked to diversify risk and enhance returns by investing in alternative assets.
Smith added: "Investment in a broad array of hedge fund strategies means minimising the overall fund beta relative to the equity and bond markets. Our fund focuses on high quality and repeatable alpha sources such as the exploitation of market inefficiencies, under-analysed segments of the market and arbitrage opportunities."
Morley Fund Management Limited is the Investment Manager of Aviva Alternative Funds and is a member of the Norwich Union Marketing Group, members of which are authorised and regulated in the UK by the Financial Services Authority for life assurance, pensions and investments. Morley Fund Management Limited is an Aviva company.
Aviva (formerly Norwich Union) is one of the leading providers of life and pensions to Europe with substantial positions in other markets around the world, making it the world's seventh-largest insurance group based on gross world-wide premiums.
Aviva's principal business activities are long-term savings, fund management and general insurance, with world-wide premium income and retail investment sales from continuing operations of GBP 30 billion and assets under management of more than GBP 240 billion as at 31 December 2003.