HEAD-TO-HEAD: Aviva vs GAM

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Since the inception of the Aviva fund in 2009, it outperformed the GAM fund, in US dollar terms, in seven out of the past eight calendar years, from 2010 to 2016, according to data from FE. In particular in 2014 and 2015, the difference in performance was in double digits.

The opposite was true only in 2017, when the GAM fund outperformed the Aviva fund by 14%, thus coming on top on the three-year and the one-year return measure as of 31 March.

Over the five year period, which includes 2014 and 2015, when GAM did particularly poorly, the Aviva fund outperforms it by a whopping 23.2% on the cumulative basis.

“The convertible markets had quite a good run in recent times, apart from last year perhaps, in terms of improving credit fundamentals,” Douali said. “The bull run in the equity market has been very beneficial for convertibles generally, and new issuance has been good.”

“Back in 2014, [the GAM fund] was short duration, while bonds significantly rallied,” Douali said. “They tried to reposition their portfolio but always tended to lag the market a little bit.”

“In 2017, they made money in each component of the portfolio until the middle of the year, when emerging market rates detracted,” he said.

The key to the GAM fund’s outperformance in 2017 was the US dollar positioning and allocation to high yield credit, according to Douali.

It remains to be seen if the GAM team can repeat the feat in the coming years, or will Aviva come out on top, as it did for most of the past eight years.

Data: FE

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