Allianz launches target-risk funds in UK and advocates Continental discussion of ‘risk
Elizabeth Corley, chief executive of Allianz Global Investors, says definitions and understandings of ‘risk’ in the Continent’s various countries are too heterogeneous for her firm to launch cross-border risk-target funds there.
AGI today launched four multi-asset, risk-target funds for UK investors, targeting levels of risk via investments made both in markets and funds.
AGI already runs about £33bn of Continental assets in similar strategies, but on the Continent it uses formats that allow clients to be catered to more individually.
Corley (pictured) said to offer the strategies broadly in Europe in fund format would require investors to share more commonly an understanding of what risk is, and for example what parts of investing are ‘risky’.
She said AGI had considered offering the same target-risk multi asset products broadly across Europe using Luxembourg Sicav structures.
But AGI decided against this, because investors in Europe’s various nations could have very different understandings of ‘risk’.
“We would be reluctant to put it in a standardised mutual fund, because with ‘one size fits all’ you have to see that it fits what the clients want – and that is not standardised at all in Europe,” she said.
One alternative, she said, would be to distribute such funds within individual networks of wealth managers or private banks, “which could have very definite approaches to risk”.
Corley said the launches came against an investor landscape characterised by “uncertainty, a desire for real income, challenges of volatility and an absolute fear of financial markets.
“We are seeing a structural shift in what individual clients need and we think the solutions of yesterday have not stood the test of time.”
Corley called for more detailed discussions across Europe about the topic that has without question become a crucial theme for all investing Europeans.
“We would like to see a joined-up discussion on risk categorisation and definitions, because you do find very different characterisations of it at a country, and investor, level.”
She said AGI would willingly participate in such discussions on the Continent.
She added it was personally important to her that the new wave of multi-asset funds were available to retail investors, not just institutional buyers such as pensions and insurance companies.
The four funds launched today in the UK target distinct levels of risk, of 7% to 11% annually for Defensive; 10% to 14% for Conservative; 12% to 17% for Moderate; and 15% to 20% for Growth.
Backtesting of the four products, using the same process and analysis the live-money portfolios are subjected to, would produce annual returns since 2000 of 8.7% (Defensive); 9.2% (Conservative); 9.6% (Moderate); and 9.8% (Growth).