30 Jan 2024
Watching turtles paddle through the surf off the Galápagos Islands. Feasting on tapas in Seville. Scouring for bargains in the souks of Marrakech.
After the restrictions of the pandemic, UK travellers are once again jetting around the world in search of novel experiences. According to official data, Brits made 23.4 million visits abroad in the second quarter of 2023, up three million on the same period in 2022. And they spent £19.3 billion in the process – more than before COVID-19 struck.
Who can blame them? Everyone enjoys a “staycation”, and the UK is a wonderful place for a holiday. But sticking to your home country can mean missing out on the thrill of the new – whether it’s sampling a spicy dish, learning a greeting in a different language, or simply seeing the sun rise over unfamiliar vistas.
There are parallels with investing, where you might forego opportunities by limiting yourself to your home market.
Let’s look at the numbers. If you invested solely in UK shares, as measured by the FTSE All Share index, over the five-year period to the end of November 2023, you would have earned an average annual return of 4.9 per cent. Compare that to the equivalent return of 12 per cent per cent available on the S&P 500 benchmark of US-listed stocks. In 2023, the difference has been even more stark – in the year to December 6, the FTSE All Share was up by a modest 0.5 cent; the S&P 500 was up 20 per cent.
A similar story is playing out in fixed income. Bond prices around the world were propped up for years by central bank quantitative easing, but as rates and inflation have risen we are seeing far more dispersion. Take UK gilts: In the 12 months to November 30 2023, total returns on the FTSE Actuaries UK Conventional Gilts All Stocks Index, which tracks non index-linked gilts, were down 5.7 per cent (over five years, the figure is -16 per cent). By contrast, investing in the Bloomberg Global Aggregate index, a composite of investment-grade government, quasi-government, corporate and securitised bonds, would have led to a gain of 2.6 per cent over the year to November 30 (or, over five years, -5.9 per cent).
But where it gets really interesting is in the historically “riskier” areas of emerging-market debt and high yield. Over the 12 months to November 30,2023, the Bloomberg Emerging Markets Hard Currency Aggregate Index was up 8.5 per cent (over five years, the figure is 3.7 per cent), while the Bloomberg Global High Yield Total Return Index gained over 11.2 per cent (over five years, the figure is 17 per cent).
Now, it goes without saying past performance is never a guarantee of future returns. What these examples hopefully illustrate is the value of broadening your investment horizons. But deciding to go global is just the first step.
Think back to our holiday analogy. There are travel options available for almost every budget – from backpacking in hostels to luxury bespoke tours. But the destination is more important than the price you pay, and seeing the world needn’t cost the Earth. The same is true in investing; there are a variety of ways to access the benefits of international markets, and some are more expensive than others.
This is exactly what we look to offer our clients with our MAF Core multi-asset range, at what we consider to be a very competitive ongoing charges figure of just 0.15 per cent. Other solutions in the UK have a large home bias in equity and fixed income. But with the UK only making up around two per cent of global GDP, and around three per cent of the global equity and fixed-income markets, why should a multi-asset portfolio be largely skewed to UK assets?
As to how we can offer a global multi-asset solution at just 0.15 per cent, it helps that we manage a wide range of asset classes in house. So, in addition to our dedicated team of 45 multi-asset professionals, we draw on all the insights and expertise of specialist investment teams across geographies and asset classes.
Our asset allocation is global and built on a more comprehensive set of methodologies than your average multi-asset solution. That’s why we can offer our MAF Core investors access to assets you would only typically find in more expensive solutions, such as high yield and emerging-market debt, while still keeping costs down. And who knows? Perhaps our investors could put the savings towards their next overseas trip. Think big – there’s a world out there to explore.
*This is hypothetical to show for illustrative purposes only, and not in any way intended as an investment recommendation.
For further information on the risks and risk profiles of our funds, please refer to the relevant KIID and Prospectus.
The value of an investment and any income from it can go down as well as up and can fluctuate in response to changes in currency and exchange rates. Investors may not get back the original amount invested.
The funds invest in emerging markets; these markets may be volatile and carry higher risk than developed markets.
The funds use derivatives; these can be complex and highly volatile. Derivatives may not perform as expected, which means the funds may suffer significant losses.
THIS IS A MARKETING COMMUNICATION Except where stated as otherwise, the source of all information is Aviva Investors Global Services Limited ("Aviva Investors"). Unless stated otherwise any opinions expressed are those of Aviva Investors. They should not be viewed as indicating any guarantee of return from an investment managed by Aviva Investors nor as advice of any nature. The value of an investment and any income from it can go down as well as up. Investors may not get back the original amount invested. The Aviva Investors Multi‐asset Funds comprise two ranges, each with five funds (together the “Funds”):Aviva Investors Multi-asset Plus Fund range comprises the Aviva Investors Multi‐asset Plus Fund I (“MAF Plus I”), the Aviva Investors Multi‐asset Fund Plus II (“MAF Plus II”), the Aviva Investors Multi‐asset Plus Fund III (“MAF Plus III”), the Aviva Investors Multi‐asset Plus Fund IV (“MAF Plus IV”) and the Aviva Investors Multi‐asset Plus Fund V (“MAF Plus V”) Aviva Investors Multi-asset Core Fund range comprises the Aviva Investors Multi‐asset Core Fund I (“MAF Core I”), the Aviva Investors Multi‐asset Fund Core II (“MAF Core II”), the Aviva Investors Multi‐asset Core Fund III (“MAF Core III”), the Aviva Investors Multi‐asset Core Fund IV (“MAF Core IV”) and the Aviva Investors Multi‐asset Core Fund V (“MAF Core V”). The Funds are sub-funds of the Aviva Investors Portfolio Funds ICVC. For further information please read the latest Key Investor Information Document and Supplementary Information Document. The Prospectus and the annual and interim reports are also available on request. Copies in English can be obtained free of charge from Aviva Investors UK Fund Services Limited, St Helen’s, 1 Undershaft, London EC3P 3DQ. You can also download copies from our website. Issued by Aviva Investors UK Fund Services Limited. Registered in England No 1973412. Authorised and regulated by the Financial Conduct Authority. Firm Reference No. 119310. Registered address: St.Helen's, 1 Undershaft, London, EC3P 3DQ. An Aviva company.