due diligence funds - architas · 2020-03-31 · due diligence this is for professional clients...

due diligence

This is for professional clients only and should not be distributed to or relied upon by retail clients.

Funds

Investment philosophy 3

The case for multi-asset investing 4

Investment process 6

Architas’ approach to responsible investing 18

The Architas investment team 20

Architas Risk Profiled Funds 28

EValue risk model 30

Architas Multi-Asset (MA) Active Funds 35

Architas Multi-Asset (MA) Blended Funds 43

Architas Multi-Asset (MA) Passive Funds 51

Single Strategy Funds 59

Key contacts 66

CONTENTS

1About Architas

Architas Multi-Manager Limited (Architas) is a specialist investment company and part of the global AXA Group. It was established in 2008, with the objective of developing a business that focuses purely on fund research and portfolio construction on behalf of various AXA entities.

ABOUTARCHITAS

1 Source: AXA, as at 31 December 2019.2 Source: AXA, as at 31 December 2018.3 Source: Architas, as at 31 December 2019.

Architas is dedicated to recommending funds for the AXA Group and building multi-asset solutions for clients across the UK, Europe and Asia. We focus on combining what we believe to be the best market offerings with innovative thinking and investment design.

Architas and the AXA GroupArchitas benefits from being a member of the AXA Group. AXA is a global company with enterprises in Europe, America, Africa, the Middle East and Asia.

AXA Group key figures:

• 105 million clients worldwide1.

• 171,000 employees (including exclusive sales associates) worldwide1.

• €1,424 billion in assets under management2.

Architas was created to meet the demands of today’s complex financial and regulatory climate. It has £23.8 billion in assets under management and under advisory3.

Architas believes that the ability to share insights with a network of like-minded professionals across the industry is an important element of running successful multi-asset strategies. It is essential to keep abreast of developments, such as the latest investment strategies or fund manager moves. Architas’ connection to AXA enriches our ability to grow our relationships, while its size and reputation enables us to access a wide range of investments and managers that may not necessarily be available to smaller firms.

Note: Architas is 100% owned by the AXA Group but it has no legal right of access to the assets of the AXA Group.

Built on a foundation of talentArchitas has handpicked talent from across the industry to build a strong investment intellect. These individuals combine to create a dynamic and experienced investment team aiming to ensure our investment products deliver the best possible results for our investors.

Our objectivesIdentify first-rate funds and asset managers through a robust and consistent selection process.

Monitor recommended funds and managers and continue to search the investment universe for new offerings.

Combine these funds and managers to create diversified portfolios which aim to meet risk and return objectives.

Further our relationships with asset managers around the world.

Assist AXA business units in developing and enhancing their investment propositions.

2

Fund selectionArchitas Advisory Services Limited (AASL) is an entity that solely services the AXA Group and external partners. It is responsible for recommending and monitoring appropriate funds, and products such as pensions, insurance bonds and ISAs.

Multi-asset fundsFor those clients who wish to delegate investment decisions to a dedicated professional, Architas’ fund selection expertise is also available via multi-asset funds. Architas aims to identify the best funds and managers, and to provide access to these skills in a simple and risk-managed manner.

Senior management team

DOROTHEE ROUGIER

Chief Finance

Officer and Head of Architas France

DUNCAN FREESTONE

Chief Operations Officer and Head of UK

JAIME ARGUELLO

Chief Investment

Officer

ANDY PURVISDirector of Risk,

Legal and Compliance

MATTHIEU ANDRÉ

Chief Executive Officer

NICOLAS DESCHAMPS

Head of Client Group

TRACEY KINSELLA

Head of Human

Resources

FRANCE GERMANI Director

of Business Transformation

3Investment philosophy

INVESTMENT PHILOSOPHY

Past performance is not a guide to future performance. The value of an investment can fall as well as rise and is not guaranteed. Investors may get back less than they invest.

An impartial and unbiased selection processDepending on our clients’ needs, our investment objectives are pursued via a number of routes – using a fund of funds structure. Within this structure we may use active or passive funds or a blend of the two. The overriding commonality, however, is that we create multi-asset strategies that aim to deliver attractive risk-adjusted returns. We do not directly manage the underlying assets ourselves. Instead, we outsource all of our market exposures to appropriate funds chosen through our investment process.

Consistent risk and return traitsWe believe that the key to running successful multi-asset strategies is a deep understanding of our chosen funds and managers. Irrespective of which range we are selecting funds for, each potential investment is examined on a variety of risk and potential return traits.

Expert portfolio construction and rigorous monitoring Fund selection is just the beginning of our multi-asset investment process. Whilst each investment has to earn its place in our portfolios, it also needs to complement the other assets. Portfolio construction, optimisation and rebalancing are all part of running a successful multi-asset fund. We strive to deliver alpha by identifying the most suitable funds and managers and combining them in an appropriate manner.

In a constantly evolving industry, there may be other holdings that could potentially be a better fit for our portfolios. In addition to rigorously monitoring our existing underlying funds and managers to ensure that they are consistently fulfilling their objectives, we continually seek new opportunities.

IndependenceSuccessful investment research and portfolio construction is extremely labour-intensive and requires specialist in-depth and up-to-date knowledge of rapidly changing markets and the fund management industry. Although part of the AXA Group, we are a business in our own right, whereas many other multi-asset managers are a division of a large investment house.

A dynamic investment teamRunning successful multi-asset strategies requires a deep understanding of different asset class characteristics and how they interact with each other, whilst an awareness of sector trends and current market dynamics is essential for fund selection.

Architas’ research responsibilities are structured to cover more than 15 financial market sectors, with one member of the investment team taking ultimate responsibility for research in each sector.

Excellent links across the industryIn addition to building portfolios of market-leading funds, we always look for opportunities to further our familiarity with the investment industry. An in-depth knowledge of fund strategies and styles give us a valuable advantage over our competitors.

4

Where to invest?Adding to this dilemma is the notion that no single asset class or investment style will consistently outperform over the economic cycle. For example some areas of the market weather recessions reasonably well whilst other asset classes race ahead in an upswing.

Moreover, we believe that no single manager can be expected to possess all the skills and insights to be ‘best in class’ in all types of investments, in all parts of the world.

As such, we believe a multi-asset approach is an effective way to tackle the challenges of what to invest in and when. Through extensive research, we aim to identify and invest with fund managers who we believe are specialists in their asset classes and markets. This expertise is made available to our clients through multi-asset portfolios that aim to offer a combination of market exposures and investment styles, whilst adhering to specific risk bands.

DiversificationDiversification is the central tenet of multi-asset investing. Accessing a range of different asset classes, markets and managers – which may be influenced by a variety of underlying drivers – can potentially open up opportunities whilst lowering overall investment risk. However, spreading investment risk effectively is becoming more challenging due to increasing globalisation and contagion between different financial markets. Meanwhile, choosing and combining the most appropriate products across the growing fund universe demands intensive research and an in-depth knowledge of the industry.

The chart on the following page gives an idea of the potential variability of returns across the financial markets. In some cases, one year’s leader can become next year’s laggard. While the majority of investment classes tend to make good progress in an expanding economy and generally fall in a recession, there can be significant dispersions between relative returns.

THE CASE FOR MULTI-ASSET INVESTINGThe challenges of investingThe mutual funds universe has grown rapidly over the years. Whilst this has led to an abundance of choice, the sheer breadth of the investment industry can be overwhelming for even the most experienced investors.

With a huge number of funds comes an equally varied range of performance. There may be large discrepancies between first-quartile and fourth-quartile performers in many sectors. How do investors go about picking winners and avoiding losers?

Identifying best-in-class funds and building an adequately diversified portfolio can be challenging.

Some of the key issues are:

1. The sheer number of options available. Investors have a choice of over 90,000 investment funds.

2. Understanding how a fund has delivered outperformance in the past and how this could potentially be sustained over the long term.

3. The inevitable movement of investment managers within the industry. If an individual was considered a ‘star’ manager, what implications does this have for the fund?

4. Creating a well-diversified combination of funds offering a range of market and sector exposures and investment styles.

5. Implementing investment changes in response to changing market dynamics.

5The case for multi-asset investing

PERFORMANCE OVER A 10 YEAR TIME FRAME ACROSS 11 DIFFERENT INVESTMENT ASSOCIATION (IA) SECTORS

Source: Morningstar as at 31 December 2019. Sterling, annualised total return. The most up-to-date information can be obtained by calling the Architas Broker Desk on 020 7562 4900. Monday to Friday 9.00am–5.00pm; calls may be recorded.Past performance is not a guide to future performance. The value of an investment can fall as well as rise and is not guaranteed. Investors could get back less than they originally invested.

Why multi-asset funds?Multi-asset strategies are one of the fastest growing areas of the fund management industry.

Combining assets that exhibit relatively low correlations can potentially help cushion a portfolio against market fluctuations, whilst providing the potential for returns from a variety of sources. As such, multi-asset funds may have the potential to provide smoother returns over time than single strategy investments.

While equities can generate significant returns above cash over the long term, the short-term volatility they sometimes deliver clearly demonstrates the risk of focusing on one asset class, even one allocated on a global basis.

We offer a suite of investment products that aim to address this challenge. Our robust investment process is designed to identify funds that show consistency across various attributes. From this selection we then construct diversified portfolios that aim to satisfy a broad set of risk and return profiles.

Best

Wor

st

2010 2011 2012 2013 2014 2015 2016 2017 2018 2019

23.28 16.16 20.39 30.61 17.77 16.21 30.09 25.29 2.86 31.09

22.42 3.21 19.40 27.51 14.92 9.38 26.00 23.56 1.10 24.56

19.17 0.03 16.64 26.45 12.82 7.78 25.38 17.79 0.44 22.37

17.51 -1.82 15.39 26.30 12.20 7.64 23.94 17.45 -0.05 22.03

17.25 -2.03 9.66 26.11 9.73 5.01 23.55 14.05 -1.15 20.38

15.85 -3.63 8.61 21.79 7.05 4.53 17.06 13.87 -3.56 17.08

12.29 -6.79 7.46 8.02 2.02 2.85 11.37 10.48 -5.71 15.84

8.83 -9.34 3.29 7.93 0.86 0.24 11.25 7.60 -9.81 11.36

8.74 -11.32 2.04 1.89 0.43 0.03 11.04 6.30 -11.15 7.19

6.42 -15.41 1.55 0.23 0.29 -0.01 0.32 1.73 -11.32 0.68

0.32 -16.31 0.49 -4.90 -0.94 -2.80 -2.00 0.14 -12.16 -0.78

UK IA SECTORS

IA £ High Yield

IA Asia Pacific Excluding Japan

IA Europe Excluding UK

IA Global

IA Japan

IA North America

IA Standard Money Market

IA Technology and Telecommunications

IA UK All Companies

IA UK Direct Property

IA UK Gilts

Best

Wor

st

2010 2011 2012 2013 2014 2015 2016 2017 2018 2019

23.28 16.16 20.39 30.61 17.77 16.21 30.09 25.29 2.86 31.09

22.42 3.21 19.40 27.51 14.92 9.38 26.00 23.56 1.10 24.56

19.17 0.03 16.64 26.45 12.82 7.78 25.38 17.79 0.44 22.37

17.51 -1.82 15.39 26.30 12.20 7.64 23.94 17.45 -0.05 22.03

17.25 -2.03 9.66 26.11 9.73 5.01 23.55 14.05 -1.15 20.38

15.85 -3.63 8.61 21.79 7.05 4.53 17.06 13.87 -3.56 17.08

12.29 -6.79 7.46 8.02 2.02 2.85 11.37 10.48 -5.71 15.84

8.83 -9.34 3.29 7.93 0.86 0.24 11.25 7.60 -9.81 11.36

8.74 -11.32 2.04 1.89 0.43 0.03 11.04 6.30 -11.15 7.19

6.42 -15.41 1.55 0.23 0.29 -0.01 0.32 1.73 -11.32 0.68

0.32 -16.31 0.49 -4.90 -0.94 -2.80 -2.00 0.14 -12.16 -0.78

UK IA SECTORS

IA £ High Yield

IA Asia Pacific Excluding Japan

IA Europe Excluding UK

IA Global

IA Japan

IA North America

IA Standard Money Market

IA Technology and Telecommunications

IA UK All Companies

IA UK Direct Property

IA UK Gilts

6

INVESTMENT PROCESS

• Investment objectives and policies

• Asset allocation

1. INVESTMENT DESIGN AND ASSET ALLOCATION • Finding skilful managers

– not lucky ones

2. FUND PRE-SELECTION

7

• Qualitative research

• Fund recommendation

• Fund approval forum

3. FUND SELECTION

• Qualitative considerations

4. PORTFOLIO CONSTRUCTION

• Monitoring of funds and managers

5. MONITORING AND RISK MANAGEMENT

8

INVESTMENT DESIGN AND ASSET ALLOCATION 1

Investment objectives and policiesUnderstanding the needs of clients is the first step in our investment design process. It is important that clients’ needs and objectives are met, so careful consideration is given to our proposition, offering a range of risk profiled and non-risk profiled funds.

Architas Risk Profiled FundsOur multi-asset (MA) funds are risk rated 2–7 to suit a range of client risk profiles and are diversified across asset class, geography, style and investment manager. We understand that clients have different attitudes to risk and costs; this is why we are style agnostic. We are one of the only investment houses focused solely on multi-manager to have created risk profiled funds with passive, active or blended management styles.

Architas MA Active Funds

Architas MA Blended Funds

Architas MA Passive Funds

Architas Income Generating Funds Investment products that can produce sustainable income can be important in financial planning to meet investor goals, especially when preparing clients for retirement. The Architas multi-asset (MA) and multi-manager (MM) funds with an explicit objective to generate income include:

RISK PROFILED

Architas MA Active Reserve Fund

Architas MA Active Moderate Income Fund

Architas MA Active Intermediate Income Fund

NON-RISK PROFILED

Architas Diversified Global Income Fund

Architas Global Equity Income Fund

Architas MM Monthly High Income Fund

Architas Specialist Funds These multi-manager (MM) funds have explicit objectives to provide high alpha exposure to specific asset classes or geographies such as alternatives, fixed income or equities.

Architas MM UK Equity Fund

Architas MM Strategic Bond Fund

Architas Diversified Real Assets Fund

Architas Positive Future Fund

9Investment process

Asset allocationHere we establish the proportions of each fund that are allocated across the appropriate asset class mix. This blend is aligned with the fund’s individual risk/return profile and our assessment of current economic and market conditions. We begin the process by deciding if the fund will have a strategic asset allocation.

Our starting point is the strategic framework provided by EValue.

The forward-looking, stochastic model provides an efficient (in terms of risk/return) asset allocation for each risk band.

NO

STRATEGICASSET

ALLOCATION

ARCHITAS NON-RISK PROFILED

FUNDS

Underlying fund selection is determined by the fund manager, taking into account the fund’s objectives, an assessment of market conditions and the research outputs from the investment team.

• Architas Diversified Real Assets

• Architas MM UK Equity

• Architas MM Strategic Bond

• Architas Diversified Global Income

• Architas MM Monthly High Income

• Architas Global Equity Income

• Architas Positive Future Fund

Funds aim to stay mid-level within the EValue risk parameters whilst the underlying funds track a range of benchmarks.

• Architas MA Passive Funds

Whilst keeping the funds within the EValue bands, the managers have the flexibility to make tactical asset allocation decisions to try to seek outperformance.

• Architas MA Active Funds

• Architas MA Blended Funds

NO YES

TACTICALASSET

ALLOCATION

YES

ARCHITAS RISK PROFILED

FUNDS

10

FUND PRE-SELECTION 2

Finding skilful managers – not lucky onesQuantitative screening is an important element in our manager selection process. The main objective is to assess a fund within an investible universe of comparable funds, to determine the ability of the fund’s manager to consistently deliver excellent risk/reward characteristics.

Our proprietary quantitative filtering tool MosaIQue by Architas® ranks funds in each asset class using a number of low correlated factors including: high risk adjusted returns, strong upside market capture, protection during a downside market, as well as overall consistency in each of the factors.

This analysis helps us understand the reasons for fund performance and highlights those that have delivered consistent returns.

RANKING CHARACTERISTICSHigh information ratioThe information ratio evaluates the outperformance a fund manager achieves, given the risk relative to their benchmark. A high information ratio indicates a higher rate of excess return for an assumed tracking error level.

Positive downside market captureDownside market capture measures fund manager performance when markets are falling. It is used to assess how well a fund manager has performed relative to an index during periods when that index has fallen.

Positive upside market captureUpside market capture measures fund manager performance when markets are rising. It is used to assess how well a fund manager has performed relative to an index during periods when that index has risen.

High Sortino ratioThe Sortino ratio differentiates between volatility that generates a return and that which detracts, providing a useful measure to evaluate an investment’s return for a given level of ‘bad’ risk.

12

FUND SELECTION 3

Gaining a true understanding of the managerThe selection stage involves conducting rigorous due diligence on those funds and managers that have demonstrated excellent risk/reward characteristics in the quantitative analysis stage. This is where we really get under the skin of a manager, dig deep into their process and personality to try to understand how they will behave in periods of market highs as well as lows.

QUALITATIVE RESEARCH

All quantitative research relies on historical data; it is only through detailed and insightful qualitative analysis that we can gain a picture of how a fund manager might respond to future events. This is easily the most time-intensive element of our investment process, but is essential to understanding the true nature of a fund. For this reason, Architas has invested significant resources in building a highly experienced research team.

The fund managers are assessed on three main criteria:

DESK-BASED RESEARCHThis is important in considering factors which the screening process cannot capture. For instance, how much of the fund performance track record can be attributed to the current manager?

The team uses a range of tools to build a deeper understanding of the funds:

QUESTIONNAIRESBefore meeting a fund manager, we ask them to complete a detailed due diligence questionnaire.

This is a qualitative step to provide more information about the investment team, as well as the strategy and objectives of the fund.

This ensures that in face-to-face meetings with the fund manager we can dig into the key elements of the process rather than use the time gathering factual information.

FACE-TO-FACE FUND MANAGER MEETINGSThese meetings are used to gain a deeper insight into their investment strategy.

We may also meet analysts, risk managers and other team members who have an influence over the investment process to probe aspects of the fund and the fund group.

13Investment process

Team• What are the unique skills of

the fund manager and what are the resources available to them?

• How experienced are the team and why are they superior to other teams?

• What additional responsibilities does the fund manager have?

• How does the remuneration structure work?

Process• How does the process

differ from other funds in the sector?

• What are the key metrics driving selection?

• Have portfolio construction decisions added value?

Performance• Is performance

consistent with the process?

• Which features of the process support downside protection?

• What is the fund’s track record and attribution of returns?

Each of the 3 elements above are assessed and scored on a 1-5 scale, and these are combined into an aggregate score for the fund. Only funds scoring 3 or above are taken through to the Fund Approval Forum.

SCORING

Here the criteria and merits are debated and assessed. Funds that are approved by the forum are added to a buy list for the portfolio managers to construct our funds.

INCLUSION

FUND RECOMMENDATION FUND APPROVAL FORUM

The quantitative and qualitative inputs are collated by the analysts into a Fund Recommendation Note.

Funds scoring 3 or above – the analyst’s highest conviction funds – are presented by the sector lead at the Fund Approval Forum.

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PORTFOLIO CONSTRUCTION4

Qualitative considerationsWhen constructing Architas portfolios, the investment team look for funds which complement each other and strike the best balance between risk and potential return.

Research tool outputs are used to analyse the volatility and correlation of returns of each fund and examine how portfolio risk varies as weightings change. Portfolio managers will implement style tilts to align with high conviction views as appropriate.

SOLDA fund may be sold when one of the following occurs:

• Changes in the Architas asset allocation policy

• Material change to the investment philosophy or process of the underlying fund

• Changes to the fund manager or team

• Inconsistent performance with the stated aims of the fund

• Identification of a superior manager in the same asset class

BOUGHTA fund will be considered for inclusion in a portfolio when it:

• Is in line with the objectives of the strategy

• Fits the prevailing asset allocation policy

• Provides the right mix of risk and potential outperformance

• Brings diversification to the existing holdings in the portfolio

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MONITORING AND RISK MANAGEMENT5

Regular monitoring and adjustment of the portfolios is undertaken by the investment managers to keep the funds in line with their objectives and to take advantage of new investment opportunities. The Architas Investment Risk and Performance Team carry out independent monitoring to ensure the portfolios remain within risk and exposure guidelines.

Monitoring funds and managersOur investment process stipulates that each sector lead analyst reviews the buy list in their sector twice a year. This review could comprise solely desk-based analysis, though analysts will have a meeting or conference call with every fund manager held or recommended by Architas at least once a year.

In these meetings, historic performance drivers and positioning for the future are discussed. The analysts seek to understand if there are any changes in the philosophy, style, process or team managing the fund which could change our expectations of risk or return for a fund. Analysts will also spend time looking for alternative funds which could

potentially replace current holdings where appropriate. Sector reviews are presented at the weekly investment team meeting, giving fund managers and other analysts the opportunity to challenge and debate their findings.

Monthly Architas Investment Committee meetingsThese meetings are chaired by the Architas Chief Investment Officer and attended by senior team members from distribution, compliance, operations and risk management as well as the head of investment risk and performance. Here, portfolio managers present on how the funds have performed relative to the objective they have been set, and the risk taken.

DEPUTY CHIEF

INVESTMENT OFFICER

DISTRIBUTION INVESTMENT RISK AND

PERFORMANCE

ARCHITAS CHIEF INVESTMENT

OFFICER (CHAIR) COMPLIANCE

RISK MANAGEMENT

PROPOSITION OPERATIONS

MONTHLY COMMITTEE MEETING

Independent performance and risk monitoringArchitas has a dedicated Investment Risk and Performance Team responsible for monitoring the risk and performance of portfolios. The risk ratios and the performance are checked by this independent team formally on a monthly basis; they also undertake a weekly review to ensure that the risk-rated funds remain within their specified risk bands. The results of this analysis are validated by the Architas Investment Committee.

18

Background and frameworkArchitas is a long-term global asset manager with a duty to act in the best interests of its clients, shareholders and other stakeholders. As a member of the AXA Group, we follow AXA’s corporate responsibility agenda of protecting people over the long term and creating stronger and more sustainable societies. In developing our Responsible Investing (RI) policy, we have aimed to align it wherever practicable with AXA’s wider corporate responsibility strategy. For more information see axa.com/en/about-us/responsible-investment.

Architas has been a United Nations (UN) supported Principles for Responsible Investment (PRI)1 signatory since 2018, scoring an ‘A’ rating for our company’s approach to ESG integration (Strategy and Governance). We believe that integrating sustainable/ responsible investment into our investment decisions and processes will benefit our clients and the wider community over the long term.

ESG ForumResponsibility for the development, implementation and monitoring of our ESG Policy sits with the Architas ESG Forum. The nature of the Forum ensures that the impacts of any new ESG related activities and initiatives are adequately assessed, considered and managed and that ESG principles are effectively promoted and adopted within Architas.

ESG FunctionTom Woodfield joined Architas as an ESG analyst in February 2018 and reports directly to Investment Manager Pela Strataki, who is responsible for ESG integration within the investment team, and benefits from the input of key members of the investment team such as the CIO, the deputy CIO, senior investment managers and several analysts.

AXA’s Responsible Investment Centre of ExcellenceThe responsibility for the development, implementation and monitoring of AXA’s Responsible Investment policy sits with the Responsible Investment Committee. The RI Committee’s decisions are interpreted and implemented by the local CIOs via the RI “Centre of Excellence”. The RI CoE is also charged with communicating and explaining the Group’s RI strategy and directives to local ESG and investment teams as well as coordinating joint CIO initiatives.

1 unpri.org/pri

ARCHITAS’ APPROACH TO RESPONSIBLE INVESTING

AXA’S RESPONSIBLE INVESTMENT CENTRE OF EXCELLENCE

ESG FORUM

ESG POLICY

• due diligence• reporting

INVESTMENT TEAM (including ESG function)

SUSTAINABLE INVESTING

• sustainable funds• collaboration and advocacy

• marketing

COMPLIANCE FORUM

VOTING POLICYCONFLICT OF

INTEREST POLICY

Our framework

19

ESG integration at ArchitasWe define ESG integration as the integration of environmental, social and corporate governance considerations into investment management processes and ownership practices in the belief that these factors can have a material impact on financial performance, in line with the UN PRI definition.

Our commitment to sustainable investing is an essential part of our investment process. By integrating ESG considerations to our investment process, we are able to analyse each investment’s ability to create, sustain and protect value with the aim of ensuring it can deliver returns in line with our clients’ expectations.

In 2017, Architas was appointed by AXA to lead the ESG integration in AXA’s unit linked business both in Europe and in Asia.

In the UK, Architas integration of ESG issues in investment processes relies on 2 key pillars: the ESG due diligence and the quantitative ESG scoring.

1. ESG due diligence The objective is to perform a qualitative ESG assessment of underlying funds by adding a dedicated questionnaire in the request for information (“RFI”) process, followed by face-to-face due diligence meeting(s), to cover:

• ESG policy and governance

• Integration in investment decision process

• Engagement and voting

• Monitoring and Reporting

Using collected information, the ESG function will form a view on the robustness of the ESG process (including peer comparison) and present findings back to the investment team. Our ESG function is also responsible for maintaining a qualitative scoring system with a minimum threshold, under which the fund is flagged for further review; this could result in removal from approved buy lists.

2. Quantitative ESG scoring The scoring methodology analyses how issuers are facing ESG trends to avoid risks and benefit from future opportunities. Funds are scored based on underlying securities’ ESG scores. The scores are subsequently aggregated at Architas portfolio or AXA unit linked solution level.

Sustainable investingWe launched our first actively managed multi- asset sustainable fund in August 2019: Architas Positive Future Fund (PFF). It is intended that at least 80% of the portfolio will be invested in funds which pursue at least one of the following four objectives for promoting sustainable and responsible investment2:

1. Positive/best-in-class screening;

2. Integration of Environmental, Social, Governance (ESG) factors;

3. Sustainability themed investing;

4. Impact investing (investments that provide capital to address social or environmental issues)

Collaboration and AdvocacyWe maintain close relationships with delegated asset managers and industry bodies which are promoting the adoption of sustainable investing such as the UK Sustainable Investment and Finance Association (UKSIF), UN PRI and the Investment Association (IA). Recently, we contributed to the IA’s consultation on sustainable investing which resulted in the responsible investment framework.

MarketingArchitas is committed to promoting the integration of ESG considerations in investment decisions and to sharing our views and research on responsible and sustainable investing with the advisers and the wider public. We regularly publish content in various industry publications and our website. adviserpointsofview.com

2 • Positive/best-in-class screening: Investment in sectors, companies or projects selected for positive ESG performance relative to industry peers.

• Environmental, Social, Governance (ESG) integration: the systematic and explicit inclusion of qualitative and quantitative ESG information in investment processes, with the objective of enhancing investment decision-making.

• Sustainability themed investing: Sustainability themed investing involves the selection of assets that contribute to addressing sustainability challenges such as climate change or water scarcity. Funds can either be single-themed or multi-themed.

• Impact investing: Impact investing, as defined by the Global Impact Investing Network (GIIN), is the process of making investments with the intention to generate a measurable social and environmental impact alongside a financial return.

21The Architas investment team

THE ARCHITAS INVESTMENT TEAM At every stage of our investment process, our professionals are well equipped with the necessary tools to help them deliver for our clients.

Architas has a large and diverse fund of funds team of individuals from different nationalities and educational backgrounds. Each sector lead has research responsibilities for a limited number of sectors, geographies and asset classes.

Architas has hand picked a wealth of talent from across the financial industry and beyond to create a strong investment team comprised of investment specialists dedicated to manager research and selection, fund of funds management and monitoring. While most multi-managers are a small part of a larger investment house, Architas is focused solely on creating multi-manager solutions for clients.

The team has developed strong, professional relationships with a wide range of industry-leading fund managers. Architas’ connection to the global AXA Group enriches our ability to grow these relationships, while our size and reputation strengthens our buying power and enables us to access a wide range of investments and managers, some of which may not be available to smaller firms, and at preferable rates for our clients.

22

Stephen AllenHead of Investment Governance and DealingStephen is responsible for the implementation and oversight of the control environment for the Investment Team, which meets all relevant regulatory requirements. Additionally Stephen manages our Investment Team dealing function and is responsible for the oversight of the daily fund dealing process and order placement for listed instruments.

Stephen joined Architas in 2008 and his 30+ years of investment experience has been gained in a variety of roles including over 15 years working for Morgan Stanley, where he was an Executive Director on the trading floor in their Institutional Equities division, as well as for Winterthur Life where he managed the Investment Technical Support team. He has previous experience of managing the Architas Multi-Asset Passive Fund range and has experience of various asset class research, including the property and Japanese equity sectors.

Stephen holds the Chartered Institute of Securities’ Commodity and Derivatives and the Securities and Financial Derivatives Representative exams, along with the IMC.

Jaime ArguelloChief Investment OfficerAs Architas’ Chief Investment Officer, Jaime is responsible for directing all aspects of the company’s investment activity, including responsibility for the structure and control of the investment function. Jaime’s role also includes the recommendation of appropriate investment strategies to other areas of the AXA business.

Jaime joined Architas in October 2016 from Barclays where he was Managing Director and Chief Investment Officer for their multi-manager and alternatives business, a role he held for seven years. Prior to Barclays, Jaime spent 10 years at Pictet as Director of third party manager selection and Head of Fixed Income choosing managers across a range of asset classes. Jaime has over 30 years of industry experience covering the full range of asset allocation, fund selection and portfolio management.

Jaime holds an engineering degree from Ecole Nationale des Ponts et Chaussées, Paris.

Sheldon MacDonald, CFA Deputy Chief Investment OfficerSheldon co-manages the Architas Multi-Asset Passive and Multi-Asset Blended fund ranges, as well as the Architas Global Equity Income fund. He oversees fund selection and manages the products’ asset allocation and investment strategies. He also leads fund manager research on global equity strategies.

Before joining Architas in 2010, Sheldon was a fund of funds manager at Nedgroup Investments, part of Old Mutual plc. As well as running a variety of long only multi-asset strategies, Sheldon has extensive experience in the hedge fund space and, prior to joining Nedgroup Investments, was Head of Derivative Trading at Old Mutual Asset Managers in South Africa.

Sheldon has a BComm in Financial Accounting and Economics and holds the IMC and is a CFA charterholder. He has over 25 years of investment experience.

EQUITY• Global

SECTOR RESPONSIBILITIES


Nathan SweeneySenior Investment ManagerNathan co-manages the Architas Multi-Asset Active Fund range and the Architas Multi-Manager UK Equity Fund. Nathan’s analyst responsibilities consist of US economic research and US fund selection.

Nathan began his 20-year investment career at AIB Investment Managers, where he was responsible for launching and managing the AIB Multi-Manager Funds. Nathan joined Architas in 2010 and has significant experience of asset allocation, portfolio management and fund selection. Nathan has a BSc in Science, a Diploma in Financial Services and is IMC qualified.

Seamus Lyons, CFA* Senior Investment ManagerSeamus manages a number of accounts for AXA clients across Europe and Asia and is a member of the Architas tactical asset allocation committee. His analyst responsibilities include research into high yield bonds and loans. Seamus joined Architas in 2015 following the acquisition of the AXA IM multi-manager business. At AXA IM, Seamus was a senior portfolio manager and the Head of Research, overseeing all aspects of the research process. In addition, he managed a number of portfolios for large institutional European clients.

Seamus has extensive experience in multi-management and prior to joining AXA IM in 2008, spent a number of years at Forsyth Partners, where he was an investment manager. Seamus has a Master’s Degree in Finance from the Michael Smurfit Graduate School of Business at University College Dublin. He is a CFA charterholder and IMC qualified.

EQUITY• North America

FIXED INCOME• High yield


Solomon Nevins, CFASenior Investment ManagerSolomon is co-manager of the Architas Diversified Real Assets Fund, Architas Monthly High Income Fund, Architas Diversified Global Income Fund and Architas Strategic Bond Fund. In addition to his responsibilities as Investment Manager, he leads the research and analysis on alternative assets.

Solomon joined Architas in 2008 after graduating with a BSc in Economics and History from Bristol University. He has an MSc in Infrastructure Investment & Finance from UCL. He is a CFA charterholder and IMC qualified.

OTHER• Alternatives

*Architas Multi-Manager Europe Limited, Dublin

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FIXED INCOME• UK fixed interest• Convertibles

OTHER• Alternatives

Mayank Markanday, CFASenior Investment ManagerMayank is a co-manager of the Architas Multi-Asset Blended range, Architas Diversified Real Assets Fund, Architas Monthly High Income Fund, Architas Strategic Bond Fund and Architas Diversified Global Income Fund. He is also manager of the AXA Investplus Equity and Bond Satellite funds distributed in Belgium.

He has sector research coverage for UK fixed income, securitised credit, convertible bonds and macro/multi-asset. He is a member of the Architas Tactical Asset Allocation Committee.

He most recently spent 10 years at Russell Investments, responsible for the Russell Real Assets Fund, Deputy on the flagship Russell Multi-Asset Growth Fund and had research coverage for global equities. He also has experience in LDI portfolio management for Russell’s Fiduciary clients.

Mayank has a BComm (Hons) in Finance and Actuarial Studies from the UNSW Business School, Sydney. He is a CFA charterholder.

Niall McDonnell, CFA*Senior Investment ManagerNiall is a Senior Investment Manager at Architas, covering global bond strategies and key institutional clients across Europe.

Niall joined Architas in 2018 from Mercer, where he was a portfolio manager within Mercer’s European investment management business. At Mercer he was responsible for passive portfolio management, currency hedging solutions and managed a number of bespoke large client multi asset portfolios. He began his career in asset servicing, working in middle office and as a Treasury manager before moving to portfolio management.

Niall is a CFA charter holder, has a Master’s degree in Finance and a BA in European Business and Languages from the National College of Ireland.

FIXED INCOME• Global government bonds

• Corporate bonds (investment grade)

Richard Byrne*Investment ManagerRichard is an Investment Manager at Architas, covering research on quantitative, smart beta and passive fixed income funds. Richard started his career in 2011 as a Derivatives Specialist at State Street before moving to Pioneer Asset Management as a Portfolio Analytics Specialist. He later moved to London to join Columbia Threadneedle Investments as an Assistant Portfolio Manager on the High Yield Credit Team.

In 2016, he moved to Anima Asset Management as a Fixed Income Portfolio Manager on the Quant Investment Desk, managing a number of fixed income and multi asset portfolios with a quant overlay before joining Architas in 2019. He holds a joint BSc in Computer Science and Economics and a MSc in Financial Economics.

FIXED INCOME• Passive

OTHER• Multi-asset

• Smart beta

*Architas Multi-Manager Europe Limited, Dublin


EQUITY• UK equities

OTHER• Property


EQUITY• Europe

• Japan

• Passive

Alex Burn, CFAInvestment ManagerAlex leads research on European and Japanese equity funds as well as due diligence on passive strategies and co-manages the Architas Global Equity Income fund and Architas Multi-Asset Passive range.

Alex joined Architas in 2013 from the AXA UK graduate scheme. He has a BA (Hons) in Corporate Management and is IMC qualified. He has also been a CFA charterholder since May 2017.

Jen CaustonInvestment ManagerJen joined Architas in 2009 to set up the company’s investment writing function before moving to the Investment Team in 2012 where she now leads research on UK equities and property in addition to managing the Architas Multi-Manager UK Equity Fund and Protector Fund range.

Prior to Architas, she worked at Schroders as an investment writer covering multi-asset funds and the investment group’s more esoteric products. Jen has an MSc in Financial Markets and Derivatives and is IMC qualified. She has 14 years of investment experience.

Asim Qadri, CFAInvestment AnalystAsim joined Architas in January 2020, covering Emerging Markets and Asia, excluding Japan, equity funds.

Prior to joining Architas, Asim spent three years at Mercer, advising trustees of large pension schemes on a range of investment strategy related issues including asset allocation, investment manager selection and portfolio construction. Prior to his time at Mercer, Asim worked in private banking at Societe Generale, helping to provide investment advice to high-net-worth and ultra high-net-worth clients.

Asim has a BSc in Economics from the University of Warwick. He has been a CFA charterholder since September 2018.

EQUITY• Asia, excluding Japan• Emerging markets

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Tom WoodfieldESG AnalystSince joining Architas in February 2018, Tom has developed and implemented a comprehensive ESG analysis tool to be integrated in the investment team’s fund selection process. He is also involved in various projects that form key elements of the ESG strategy throughout the business.

Prior to joining Architas, Tom spent 3 years at Inflection Point Capital Management as a Sustainable Investment Analyst. Here he was responsible for providing ESG research and investment insights across a number of sustainability enhanced-investment strategies.

Tom has a BSc in Biological Sciences from the University of Exeter and an MSc in Environmental Technology, with a specialisation in economics and policy, from Imperial College London. He is IMC qualified.

Shayan RatnasingamInvestment AnalystSince joining Architas in September 2018, Shayan has focused his time on researching thematic and socially responsible investment related strategies as part of the fund selection process. Within the investment team Shayan has responsibilities for covering money markets and further supporting the development and implementation of the business’s ESG strategy.

Prior to joining Architas, Shayan spent 2 years at Aon as an investment analyst. Shayan worked with trustees of large pension schemes in setting their investment strategy, including asset allocation, portfolio construction and fund selection. Prior to his time at Aon, Shayan worked in credit risk modelling within the banking sector.

Shayan has a BSc (Hons) in Actuarial Science from Cass Business School, London. He is currently working toward becoming a Fellow of the Institute of Actuaries (FIA).

Dr Pela Strataki, CFAInvestment ManagerPela is portfolio manager of the AXA Investplus Alternative Defensive fund, and deputy portfolio manager on the Belgian range of funds. She is also the sector lead on absolute return alternative funds and local and hard currency emerging market debt.

Prior to joining Architas, Pela spent 6 years at Tilney Investment Management (previously Towry Investment Management) in London, covering a range of absolute return and long only strategies and advising on a substantial absolute return allocation. Prior to this she spent 5 years covering a range of hedge fund strategies in offshore format.

Pela has a D.Phil. degree in Classics from the University of Oxford. She holds the Securities and Investment Institute Certificate in Investment Management and is a CFA charterholder.

FIXED INCOME• Emerging market debt

OTHER• Absolute return

OTHER• Cash - money markets/currency• Global thematics• Property

SECTOR RESPONSIBILITIES SECTOR RESPONSIBILITIES

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Richard ChiangQuantitative AnalystRichard joined Architas in June 2017. He works on various quantitative projects within the Investment team including asset allocation modelling, quant screening and performance attribution.

Richard previously worked at Standard Chartered Bank as a quant analyst in the fixed income pricing area, and has also worked at Barclays Capital and Merrill Lynch in derivatives pricing and risk management in the last 10 years. He has an MSc degree in Quant Finance from Cass Business School and an MSc in Information Systems from University of Nottingham.

Priyanka Kalia Investment Performance and Reporting Analyst Priyanka works within the Architas Investment team as Investment Performance and Reporting Analyst. She is responsible for the output and coordination of performance and client reporting across the Investment Team. Performance and client reporting is a governance requirement within many client Investment Advisory Agreements, thus it is essential that the output meets a minimum quality threshold which aligns with our obligations and is provided in a timely manner.

Priyanka joined Architas in September 2018, and holds a Graduate Degree in Economics and an MBA Degree in Finance. She had previously worked for the Morgan Stanley Asia Pacific Research Management team as a Research Associate reporting to the COO of APAC research and has also worked for BNP Paribas Global Markets Client Analytics team as a Client Reporting Analyst.

Elisa Piscopiello Investment Dealing AssistantElisa joined Architas as a Trainee in 2018 through the Investment 20/20 programme. She completed two rotations in the Investment Team, focussing on Client Reporting and quantitative support, and subsequently in the Client Group Team, focussing on Procurement. In 2019 Elisa returned to the Investment Team as Investment Dealing Assistant.

Previously, she worked for a specialist recruitment business providing staffing solutions to leading Investment Managers. In 2016 Elisa graduated from University of Kent with a First Class degree in Financial Economics with Econometrics, and she holds the IMC.

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Risk profile

Risk level 1 Risk level 2 Risk level 3 Risk level 4 Risk level 5 Risk level 6 Risk level 7

Only cash 0.0% 8.3% 8.3% 10.0% 10.0% 12.1% 12.1% 14.6% 14.6% 17.7% 17.7% …

MA Passive Reserve 7.7%

MA Blended Reserve

MA Active Reserve

MA Passive Moderate 9.4%

MA Blended Moderate

MA Active Moderate Income

MA Passive Intermediate 11.0%

MA Blended Intermediate

MA Active Intermediate Income

MA Passive Progressive 13.4%

MA Blended Progressive

MA Active Progressive

MA Passive Growth 16.0%

MA Blended Growth

MA Active Growth

MA Passive Dynamic 17.8%

MA Active Dynamic

ARCHITAS RISK PROFILED FUNDSRisk profiling is very helpful in aiding an adviser to find an appropriate investment solution for a client as it can be used to help understand client investment goals and attitudes to risk.

Incorporating risk profiling models into investment strategies is also common practice for asset managers as it provides a guide for ensuring that each fund’s expected volatility adheres to its risk/return objective, and the adviser’s and their clients’ expectations.

The Architas Risk Profiled Funds are rated on a scale of 1 to 7: risk level 1 is similar to keeping cash in a bank or building society deposit account. The lowest rating of our ranges is 2 and targeted at the cautious investor; 7 is the highest risk rating on the scale and funds in this category could be suitable for adventurous investors with a higher tolerance to risk in search of potentially higher returns.

The EValue risk model calculates statistical estimates of asset returns, volatility and their correlation to each other combined with the expected return, volatility and correlation for each relevant asset class, and uses this data to compute optimal portfolios for each specified level of risk.

In line with Modern Portfolio Theory, these portfolios each have a specific volatility target or range and we use this risk profiling system as a guide to the funds’ expected volatility. We assign each fund a risk band which provides us with a target volatility range for the overall portfolio.

The Architas Risk Profile proof statement is published monthly and evidences that the Risk Profiled Funds remained within their expected volatility bands. This is produced to aid you in your ongoing due diligence.

‘Volatility’ in this context should not be confused with the standard deviation of a historical return series. The EValue model aims to give a forward-looking indication of risk, and measures volatility in terms of the dispersion of potential return outcomes generated through a series of theoretical simulations. It is not a guarantee of what will actually happen, but provides a useful guide.

ARCHITAS RISK PROFILES

for illustrative purposes only

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Risk profile

Risk level 1 Risk level 2 Risk level 3 Risk level 4 Risk level 5 Risk level 6 Risk level 7

Only cash 0.0% 8.3% 8.3% 10.0% 10.0% 12.1% 12.1% 14.6% 14.6% 17.7% 17.7% …

MA Passive Reserve 7.7%

MA Blended Reserve

MA Active Reserve

MA Passive Moderate 9.4%

MA Blended Moderate

MA Active Moderate Income

MA Passive Intermediate 11.0%

MA Blended Intermediate

MA Active Intermediate Income

MA Passive Progressive 13.4%

MA Blended Progressive

MA Active Progressive

MA Passive Growth 16.0%

MA Blended Growth

MA Active Growth

MA Passive Dynamic 17.8%

MA Active Dynamic

Architas Risk Profiled Funds

TARGET VOLATILITY (%)

ILLUSTRATIVE EXAMPLE OF THE ARCHITAS RISK PROFILE PROOF STATEMENT The chart below shows the target month-end expected annualised volatility for our Passive Fund range. The Active and Blended Funds’ target volatility figures are shown against their Passive counterparts, which are expected to fall within the same respective risk bands. The volatility is based upon a 15-year time horizon using forward projections. Such forecasts are not a reliable indicator of future performance and therefore the figures shown below are for illustrative purposes only.

More than 0.25% above Passive risk level figure

More than 0.25% below Passive risk level figure

Within 0.25% of Passive risk level figure

EVALUE RISK MODELRisk modelling and efficient portfoliosThe strategic asset allocation for the Architas multi-asset risk profiled funds is provided by EValue. The aim is to create an optimised portfolio for each risk rating that is efficient, i.e. one that aims to provide the best expected return for the given risk level, while also being relatively stable over time.

ESTABLISHEDEValue has a long track record of risk modelling and has created a sophisticated modern risk model which is regularly monitored, updated and back tested to demonstrate how it has performed as a predictor of long-term returns.

1WHY EVALUE?

REAL WORLD MODELWe have used EValue in conjunction with our risk profiled fund range since 2008. We believe the EValue model is a cutting edge, real world model offering a modern, flexible forecasting tool that helps to deliver sensible and consistent outcomes that are explainable. It does not rely on historical returns to make assumptions of future returns.

2COMMITTEDEValue has a high level of commitment to the risk modelling business and to client servicing but it is imperative that we carry out our own due diligence periodically to satisfy ourselves that the model we use is still meeting our needs.

3

Who are EValue?The EValue team originated at Towers Watson in 1993 and have a long history of financial risk profiling, modelling investment market returns and optimising asset allocations.

They have worked with clients and regulators for over 20 years and are well regarded in the industry with a large client base, working with product providers, consultants and financial advisers.

How does the EValue model work?The EValue model aims to determine the asset allocation that is expected to deliver the best return over the relevant investment time horizon – 15 years – for each level of risk, while allowing for any portfolio constraints.

The model is stochastic, meaning that it allows for a range of possible future outcomes for each of the asset classes being considered. Rather than relying simply on past returns to predict future returns, the model uses historical asset class returns, historical asset class correlations, and current economic data in order to make sensible and realistic assumptions of future expected returns.

The current economic data inputs include a key interest rate component, which impacts most other asset class returns. There are

also components for GDP, inflation, currencies, alongside a model for equities, corporate bonds and property. It uses mathematical formulae to forecast many thousands of possible future investment returns, and from these determines the expected average return.

The model focuses on 95% of the outcomes generated, with the outliers – the best and worst 2.5% of outcomes – excluded. We feel this large range of possible outcomes is more representative of the typical investor’s experience than the more traditional deterministic model which gives fixed assumptions of future returns. In our opinion the latter is a more basic approach which assumes that taking greater risk will always generate greater returns, which of course we know is not always the case over all time periods.

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Why is the time horizon important?Time horizons should always be considered when selecting investments, since the time period associated with a given investment objective is fundamental in determining the most suitable asset classes to be held. We use a 15-year forward looking investment time span as we feel it represents a typical long-term investor time horizon. Economic scenario generating forecasts can realistically take into account the characteristics of the different asset classes depending on how long they are held. For example cash has little or no variation in returns over the short term but over longer time periods interest rates can vary dramatically, leading to greater variation of returns across all asset classes. More generally, in theory the longer the intended investment term, the greater capacity there is for accepting some shorter term volatility.

Regional data The EValue model uses data from each major economy and covers the UK, US, Japan, Europe, Asia Pacific ex Japan and emerging markets.

Asset classes EValue is a multi-asset model containing around 15 sub asset classes, including UK and other developed market equities, emerging market equities, UK and global bonds (government, corporate and high yield), property and cash.

Different asset classes may perform differently from one another at different times, providing portfolio diversification. The asset classes used in the model will be represented in the portfolios to varying degrees, dependent upon the risk profile. For example, in the lower risk profiles you would typically expect to see a higher allocation to bonds compared to the higher risk profiled funds where the equity allocation would typically be higher.

ConstraintsAlthough the model aims to create efficient portfolios the results might not always be desirable and achievable. For example, a portfolio with no UK equities might be the most optimal outcome from a purely quantitative perspective, but may be unacceptable to a UK client base. Similarly, a portfolio with a large allocation to a single asset class, especially property, may be considered unacceptable due to the lack of diversification or liquidity. To address these issues, we have agreed on constraints that are used during the portfolio optimisation, to ensure adequate diversification and to acknowledge that it is designed for investors who have GBP as their base currency.

The constraints are applied to ensure the portfolios are both relevant to the audience and sufficiently diversified whilst accepting that there may be a minimal reduction in expected return in exchange for a more suitable portfolio.

There may also be some tethering applied to portfolios to reduce unnecessary portfolio turnover. For example a large portfolio change may be rejected in favour of a smaller change if return expectations are nearly as high. Tethering can mean accepting slightly lower expectations but in general the effects on expected return are tiny and may even be lost entirely once the allocation has been rounded. In return, allocations are more stable and there is less turnover and associated costs.

How often is the model updated?In order to remain current the EValue model is updated quarterly, with any change in asset allocation implemented on the first working day of March, June, September and December. In between times the model is reviewed monthly by EValue to monitor asset class returns and asset allocations. The model permits an ad-hoc change in between these regular updates should market conditions warrant it and is itself a dynamic model that may be updated to reflect changing asset class behaviour.

VolatilityThe risk target for each risk profile is an attempt to provide investors with a guide to the uncertainty of the expected future returns of that risk level and therefore to the potential scale of disappointment that they might face from a negative outcome. The volatility figure calculated by the EValue model is a measure of the potential dispersion of the forward looking projections of expected returns and should not be confused with the historical volatility of the actual returns experienced.

Risk profilingOur EValue model provides a risk scale from 1-7 where 1 is the least risky, typically represented by cash on deposit; and 7 is the most risky, intended for the more adventurous investor. Each risk level has a risk target in terms of the dispersion of the potential future returns. The asset allocation model is designed to help the risk profiled funds remain within their risk boundaries for the life of the investment. Architas offers funds from risk profiles 2 to 7.

33Architas Risk Profiled Funds

USING REAL LIFE TO EXPLAIN THE EVALUE MODEL

As you extend the period being measured – think of this as measuring the total cumulative time taken for all your commutes over a week, or a month, or longer – the range of expected outcomes narrows: some of the journeys during the month might take longer than normal, but these will probably be balanced by some journeys which are quicker than normal.

Armed with a better picture of the most probable time, along with an idea of the best and worst case, you can make a better decision about whether you want to make the journey (or choose a different route!)

Consider someone who is thinking about moving to a new area. They may investigate how long their trip to work will take, by trying it out once or twice. This is quite likely to give them a distorted view of what to expect.

The EValue model similarly aims to show you both the expected average outcome, as well as a realistic range of possible outcomes – the best days and worst days along with the likely average over time.

They would do far better to measure the journey as many times as possible. They will then be able to say with much more confidence that the average time is one hour, and will also find out that on a good day it may take 45 minutes, on a bad day 75 minutes, with the odd really bad journey of say 2 hours due to an accident or congestion depending on their mode of transport.

BA

BA

BA

BA


After identifying what we feel are the most appropriate funds through our comprehensive investment process, the underlying investments are carefully combined to meet a specific risk and return profile. Each multi-asset fund aims to provide diversified exposure to a range of markets, skills and strategies, carefully constructed to satisfy a number of risk profiles.

The Architas MA Active range comprises:

• Architas MA Active Reserve Fund – seeks to achieve capital growth and income with a low level of volatility (risk), having a risk profile of 2, in a range from 1 to 7 where 1 is the lowest risk and 7 the highest;

• Architas MA Active Moderate Income Fund – seeks to achieve income with a below median level of volatility (risk), having a risk profile of 3, in a range from 1 to 7 where 1 is the lowest risk and 7 the highest;

• Architas MA Active Intermediate Income Fund – seeks to achieve income with a median level of volatility (risk), having a risk profile of 4, in a range from 1 to 7 where 1 is the lowest risk and 7 the highest;

• Architas MA Active Progressive Fund – seeks to achieve capital growth and income with an above median level of volatility (risk), having a risk profile of 5, in a range from 1 to 7 where 1 is the lowest risk and 7 the highest;

• Architas MA Active Growth Fund – seeks to achieve capital growth with a moderately high level of volatility (risk), having a risk profile of 6, in a range from 1 to 7 where 1 is the lowest risk and 7 the highest; and

• Architas MA Active Dynamic Fund – seeks to achieve capital growth and income with a high level of volatility (risk), having a risk profile of 7, in a range from 1 to 7 where 1 is the lowest risk and 7 the highest.

ARCHITAS MULTI-ASSET (MA) ACTIVE FUNDSThe Architas MA Active range is underpinned by a fund of funds structure and is designed to offer access to a combination of leading funds via a single diversified portfolio.

Please note the value and income of funds can go down as well as up and is not guaranteed which means your client may not get back the full amount invested.

FURTHER INFORMATIONFor further information on the risks specific to each fund, please obtain a copy of the Key Investor Information document (KIID) which is available at architas.com

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* This is for Share Class R only. For information on other share classes, please refer to the prospectus of the fund.** Subject to a residual value of £500 per fund.+ All fees are charged to the capital of the fund, rather than to income, which may constrain capital growth accordingly.

Included in the IA Volatility Managed sector, this fund seeks to achieve capital growth and income with a low level of volatility (risk), having a risk profile of 2, in a range from 1 to 7 where 1 is the lowest risk and 7 the highest.

The IA ‘Volatility Managed’ sector contains funds that are managed with the aim of adhering to a set level of volatility (a measure of the size of changes in the value of an investment). The funds in each sector will not have exactly the same characteristics (such as their objectives, level of risk, types of risk or level of volatility) and are therefore not an exact like-for-like comparison.

Investment policy The Fund is an actively managed fund of funds.

The Fund invests at least 70% of its assets in other funds (underlying funds), including funds which are traded on stock exchanges (investment trusts and exchange traded funds), other closed-ended funds and funds managed by the ACD or its associates.

The underlying funds will invest globally (including in emerging markets) in a range of asset classes and financial instruments including shares, debt instruments (bonds) including those which can easily be converted into cash (money market instruments), freely transferable rights to buy other investments at a future date (warrants), financial contracts that derive their values from those of other investment instruments or indices (derivatives) and deposits.

The underlying funds will where practicably possible, be ‘active’ funds, which are investment funds that aim to beat the performance of various financial indices.

The Fund may also invest directly in the above asset classes and financial instruments when there are specific benefits in doing so.

Further, the Fund may also obtain indirect exposure to property through investment in Real Estate Investment Trusts (REITs) and shares in property investment companies, and may engage in stock-lending and borrowing.

When required to manage liquidity, or the Fund’s risk, the Fund may hold its assets in cash or deposits and money market instruments.

The Fund may only use derivatives to reduce risk or to manage the Fund more efficiently (often referred to as “efficient portfolio management”).

The Fund aims to take a low level of risk in achieving its investment objective. The Fund’s investments are combined together in different proportions as determined by the ACD based on asset risk profiles set by an external risk modelling company. The riskiness of different combinations and proportions of types of investment are measured by predicting how they might behave over a 15 year period. The risk modelling company assigns each combination of assets to one of seven risk profiles, ranging from 1, which reflects the risk of holding cash in bank accounts, to 7, which is the riskiest profile. The Fund has a risk profile of 2, which means it will typically have a lower exposure to higher risk assets, and a greater exposure to lower risk assets than other funds in the Company which have a higher risk profile. Typically shares, certain types of bonds, or exposure to property/commodities will be classified as higher risk assets, whilst certain other bonds, cash and near cash (money market instruments, deposits and money market funds) will be classified as lower risk assets.

The actual investments of the Fund are not chosen by the risk modelling company and the ACD retains the discretion to select the Fund’s investments. The ACD may change the combination of assets for the Fund where it sees a benefit in doing so, as long as its overall risk profile remains similar.

There is no guarantee that the Fund’s performance will reflect the behaviour of the assets used to create the risk profile.

What sort of investor might invest in this fund?This fund is intended for investors looking for the potential of income and/or capital growth from their investments and may not be appropriate for investors who plan to withdraw their money within five years. Owing to the volatile nature of the assets held, investors should be prepared to accept a risk of losses in the real capital value of their investment if they invest in this fund.

FUND INFORMATION – AS AT DECEMBER 2019

Available as OEIC, ISA, ISA Transfers

Retail shares Income and Accumulation

Portfolio Turnover Ratio (PTR) 143.83%

Minimum lump sum investment* £500

Additional lump sum investment £500

Regular investment (monthly) £50

Minimum increase to regular investment £10

Minimum switch amount** £500

Minimum partial redemption** £500

Minimum balance* £500

Annual accounting dates 31 December

Interim accounting dates 30 June

Ex-dividend dates31 December, 31 March, 30 June, 30 September

Payment dates28/29 February, 31 May, 31 August, 30 November

Charges from income or capital Capital+

ARCHITAS MA ACTIVE RESERVE FUND

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Included in the IA Mixed Investment 0-35% Shares sector, this fund seeks to achieve income with a below median level of volatility (risk), having a risk profile of 3, in a range from 1 to 7 where 1 is the lowest risk and 7 the highest.

Investment policyThe Fund is an actively managed fund of funds.








The Fund aims to take a below median level of risk in achieving its investment objective. The Fund’s investments are combined together in different proportions as determined by the ACD based on asset risk profiles set by an external risk modelling company. The riskiness of different combinations and proportions of types of investment are measured by predicting how they might behave over a 15 year period. The risk modelling company assigns each combination of assets to one of seven risk profiles, ranging from 1, which reflects the risk of holding cash in bank accounts, to 7, which is the riskiest profile. The Fund has a risk profile of 3, which means it will typically have a balanced exposure to higher risk assets and lower risk assets than other funds in the Company which have a higher or lower risk profile. Typically shares, certain types of bonds, or exposure to property/commodities will be classified as higher risk assets, whilst certain other bonds, cash and near cash (money market instruments, deposits and money market funds) will be classified as lower risk assets.



What sort of investor might invest in this fund?This fund is intended for investors looking for the potential of income and/or capital growth from their investments and may not be appropriate for investors who plan to withdraw

their money within five years. Owing to the volatile nature of the assets held, investors should be prepared to accept a risk of losses in the real capital value of their investment if they invest in this fund.








Minimum increase to regular investment

£10









* This is for Share Class R only. For information on other share classes, please refer to the prospectus of the fund.** Subject to a residual value of £500 per fund.+ Please note for this fund only the Annual Management Charge is charged to capital.

ARCHITAS MA ACTIVE MODERATE INCOME FUND


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Included in the IA Mixed Investment 20-60% Shares sector, this fund seeks to achieve income with a median level of volatility (risk), having a risk profile of 4, in a range from 1 to 7 where 1 is the lowest risk and 7 the highest.









The Fund aims to take a median level of risk in achieving its investment objective. The Fund’s investments are combined together in different proportions as determined by the ACD based on asset risk profiles set by an external risk modelling company. The riskiness of different combinations and proportions of types of investment are measured by predicting how they might behave over a 15 year period. The risk modelling company assigns each combination of assets to one of seven risk profiles, ranging from 1, which reflects the risk of holding cash in bank accounts, to 7, which is the riskiest profile. The Fund has a risk profile of 4, which means it will typically have a balanced exposure to higher risk assets and lower risk assets than other funds in the Company which have a higher or lower risk profile. Typically shares, certain types of bonds, or exposure to property/commodities will be classified as higher risk assets, whilst certain other bonds, cash and near cash (money market instruments, deposits and money market funds) will be classified as lower risk assets.



What sort of investor might invest in this fund?This fund is intended for investors looking for the potential of income and maintenance of capital from their investments and may not be appropriate for investors who plan to withdraw their money within five years.

Owing to the volatile nature of the assets held, investors should be prepared to accept a risk of losses in the real capital value of their investment if they invest in this fund.









£10










ARCHITAS MA ACTIVE INTERMEDIATE INCOME FUND

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Included in the IA Mixed Investment 40-85% Shares sector, this fund seeks to achieve capital growth and income with an above median level of volatility (risk), having a risk profile of 5, in a range from 1 to 7 where 1 is the lowest risk and 7 the highest.








The Fund may use derivatives to reduce risk or to manage the Fund more efficiently (often referred to as “efficient portfolio management”).

The Fund aims to take an above median level of risk in achieving its investment objective. The Fund’s investments are combined together in different proportions as determined by the ACD based on asset risk profiles set by an external risk modelling company. The riskiness of different combinations and proportions of types of investment are measured by predicting how they might behave over a 15 year period. The risk modelling company assigns each combination of assets to one of seven risk profiles, ranging from 1, which reflects the risk of holding cash in bank accounts, to 7, which is the riskiest profile. The Fund has a risk profile of 5, which means it will typically have greater exposure to higher risk assets than other funds in the Company which have a lower risk profile. Typically shares, certain types of bonds, or exposure to property/commodities will be classified as higher risk assets, whilst certain other bonds, cash and near cash (money market instruments, deposits and money market funds) will be classified as lower risk assets.



What sort of investor might invest in this fund?This fund is intended for investors looking for the potential of income and/or capital growth from their investments and may not be appropriate for investors who plan to withdraw their money within five years.

Owing to the volatile nature of the assets held, investors should be prepared to accept a risk of losses in the real capital value of their investment if they invest in this fund.









£10






Ex-dividend dates 31 December, 30 June

Payment dates 28/29 February, 31 August


ARCHITAS MA ACTIVE PROGRESSIVE FUND


40

* This is for Share Class R only. For information on other share classes, please refer to the prospectus of the fund.** Subject to a residual value of £500 per fund.

Included in the IA Flexible Investment sector, this fund seeks to achieve capital growth with a moderately high level of volatility (risk), having a risk profile of 6, in a range from 1 to 7 where 1 is the lowest risk and 7 the highest.









The Fund aims to take a moderately high level of risk in achieving its investment objective. The Fund’s investments are combined together in different proportions as determined by the ACD based on asset risk profiles set by an external risk modelling company. The riskiness of different combinations and proportions of types of investment are measured by predicting how they might behave over a 15 year period. The risk modelling company assigns each combination of assets to one of seven risk profiles, ranging from 1, which reflects the risk of holding cash in bank accounts, to 7, which is the riskiest profile. The Fund has a risk profile of 6, which means it will typically have a balanced exposure to higher risk assets and lower risk assets than other funds in the Company which have a higher or lower risk profile. Typically shares, certain types of bonds, or exposure to property/commodities will be classified as higher risk assets, whilst certain other bonds, cash and near cash (money market instruments, deposits and money market funds) will be classified as lower risk assets.



What sort of investor might invest in this fund?This fund is intended for investors looking for the potential of income and/or capital growth from their investments and may not be appropriate for investors who plan to withdraw their money within five years. Owing to the volatile nature of the assets held, investors should be prepared to accept a risk of losses in the real capital value of their investment if they invest in this fund.









£10








Charges from income or capital Income

ARCHITAS MA ACTIVE GROWTH FUND

41


Included in the IA Flexible Investment sector, this fund seeks to achieve capital growth and income with a high level of volatility (risk), having a risk profile of 7, in a range from 1 to 7 where 1 is the lowest risk and 7 the highest.









The Fund aims to take a high level of risk in achieving its investment objective. The Fund’s investments are combined together in different proportions as determined by the ACD based on asset risk profiles set by an external risk modelling company. The riskiness of different combinations and proportions of types of investment are measured by predicting how they might behave over a 15 year period. The risk modelling company assigns each combination of assets to one of seven risk profiles, ranging from 1, which reflects the risk of holding cash in bank accounts, to 7, which is the riskiest profile. The Fund has a risk profile of 7, which means it will typically have greater exposure to higher risk assets than other funds in the Company which have a lower risk profile. Typically shares, certain types of bonds, or exposure to property/commodities will be classified as higher risk assets, whilst certain other bonds, cash and near cash (money market instruments, deposits and money market funds) will be classified as lower risk assets.



What sort of investor might invest in this fund?This fund is intended for investors looking for the potential of capital growth from their investments and may not be appropriate for investors who plan to withdraw their money within five years. Owing to the volatile nature of the assets held, investors should be prepared to accept a risk of losses in the real capital value of their investment if they invest in this fund.









£10





Interim Accounting dates 30 June




ARCHITAS MA ACTIVE DYNAMIC FUND



After identifying what we feel are the most appropriate funds through our comprehensive investment process, the underlying investments are carefully combined to meet a specific risk and return profile. Each multi-asset product aims to provide diversified exposure to a range of markets, skills and strategies, carefully blended to satisfy a number of risk profiles.

The Architas MA Blended range comprises:

• Architas MA Blended Reserve Fund – seeks to achieve capital growth and income with a low level of volatility (risk), having a risk profile of 2, in a range from 1 to 7 where 1 is the lowest risk and 7 the highest;

• Architas MA Blended Moderate Fund – seeks to achieve capital growth and income with a below median level of volatility (risk), having a risk profile of 3, in a range from 1 to 7 where 1 is the lowest risk and 7 the highest;

• Architas MA Blended Intermediate Fund – seeks to achieve capital growth and income with a median level of volatility (risk), having a risk profile of 4, in a range from 1 to 7 where 1 is the lowest risk and 7 is the highest;

• Architas MA Blended Progressive Fund – seeks to achieve capital growth and income with an above median level of volatility (risk), having a risk profile of 5, in a range from 1 to 7 where 1 is the lowest risk and 7 the highest; and

• Architas MA Blended Growth Fund – seeks to achieve capital growth and income with a moderately high level of volatility (risk), having a risk profile of 6, in a range from 1 to 7 where 1 is the lowest risk and 7 the highest.

ARCHITAS MULTI-ASSET (MA) BLENDED FUNDSThe Architas MA Blended Fund range is underpinned by a fund of funds structure and is designed to offer access to a blend of leading funds via single diversified portfolios. The range combines the value-for-money exposure of passive funds with the potential for outperformance from active funds.


FURTHER INFORMATIONFor further information on the risks specific to each fund, please obtain a copy of the Key Investor Information Document (KIID) which is available at architas.com

44






The underlying funds will be a blend of ‘active’ funds, whose managers aim to beat the performance of a benchmark, and ‘passive’ funds, which aim to track the performance of an index. Active funds will be selected over passive funds where the ACD believes the potential returns from active funds outweigh any additional cost.




The Fund may use derivatives to help achieve the investment objective (investment purposes) as well as to reduce risk or to manage the Fund more efficiently (often referred to as “efficient portfolio management”).




What sort of investor might invest in this fund? The fund is intended for investors looking for the potential of a reasonable level of real capital growth from their investments and may not be appropriate for investors who plan to withdraw their money within five years. Investors in this fund should be prepared to accept a risk of losses in the real capital value of their investments.









£10







Payment dates 31 January, 31 July


ARCHITAS MA BLENDED RESERVE FUND

45


Included in the IA Volatility Managed sector, this fund seeks to achieve capital growth and income with a below median level of volatility (risk), having a risk profile of 3, in a range from 1 to 7 where 1 is the lowest risk and 7 the highest.









The Fund aims to take a below median level of risk in achieving its investment objective. The Fund’s investments are combined together in different proportions as determined by the ACD based on asset risk profiles set by an external risk modelling company. The riskiness of different combinations and proportions of types of investment are measured by predicting how they might behave over a 15 year period. The risk modelling company assigns each combination of assets to one of seven risk profiles, ranging from 1, which reflects the risk of holding cash in bank accounts, to 7, which is the riskiest profile. The Fund has a risk profile of 3, which means it will typically have a lower exposure to higher risk assets, and a greater exposure to lower risk assets than other funds in the Company which have a higher risk profile. Typically shares, certain types of bonds, or exposure to property/commodities will be classified as higher risk assets, whilst certain other bonds, cash and near cash (money market instruments, deposits and money market funds) will be classified as lower risk assets.



What sort of investor might invest in this fund? The fund is intended for investors looking for the potential of real capital growth from their investments and may not be appropriate for investors who plan to withdraw their money within five years. Investors in this fund should be prepared to accept a risk of losses in the real capital value of their investments.









£10






Ex-dividend dates 31 December

Payment dates 31 January


ARCHITAS MA BLENDED MODERATE FUND


46

Included in the IA Volatility Managed sector, this fund seeks to achieve capital growth and income with a median level of volatility (risk), having a risk profile of 4, in a range from 1 to 7 where 1 is the lowest risk and 7 is the highest.












What sort of investor might invest in this fund?The fund is intended for investors looking for the potential of real capital growth from their investments and may not be appropriate for investors who plan to withdraw their money within five years. Owing to the volatile nature of the assets held, investors in this fund should be prepared to accept a risk of losses in the real capital value of their investment.









£10










ARCHITAS MA BLENDED INTERMEDIATE FUND

47

Included in the IA Volatility Managed sector, this fund seeks to achieve capital growth and income with an above median level of volatility (risk), having a risk profile of 5, in a range from 1 to 7 where 1 is the lowest risk and 7 the highest.












What sort of investor might invest in this fund? The fund is intended for investors looking for the potential of real capital growth from their investments and may not be appropriate for investors who plan to withdraw their money within five years. Owing to the volatile nature of the assets held, investors in this fund should be prepared to accept a risk of losses in the real capital value of their investments.









£10










ARCHITAS MA BLENDED PROGRESSIVE FUND


48


Included in the IA Volatility Managed sector, this fund seeks to achieve capital growth and income with a moderately high level of volatility (risk), having a risk profile of 6, in a range from 1 to 7 where 1 is the lowest risk and 7 the highest.









The Fund aims to take a moderately high level of risk in achieving its investment objective. The Fund’s investments are combined together in different proportions as determined by the ACD based on asset risk profiles set by an external risk modelling company. The riskiness of different combinations and proportions of types of investment are measured by predicting how they might behave over a 15 year period. The risk modelling company assigns each combination of assets to one of seven risk profiles, ranging from 1, which reflects the risk of holding cash in bank accounts, to 7, which is the riskiest profile. The Fund has a risk profile of 6, which means it will typically have greater exposure to higher risk assets, than other funds in the Company which have a lower risk profile. Typically shares, certain types of bonds, or exposure to property/commodities will be classified as higher risk assets, whilst certain other bonds, cash and near cash (money market instruments, deposits and money market funds) will be classified as lower risk assets.



What sort of investor might invest in this fund? The fund is intended for investors looking for the potential of real capital growth from their investments and may not be appropriate for investors who plan to withdraw their money within five years. Owing to the volatile nature of the assets held, investors in this fund should be prepared to accept a risk of losses in the real capital value of their investments.









£10









ARCHITAS MA BLENDED GROWTH FUND


Working with EValue, a leading global risk management company, Architas has risk-rated its six passive funds to fit six attitudes to risk.

As the Architas MA Passive Funds contain holdings of index funds which are structured to replicate the performance of an index, the costs exclude manager research. However, similar to other fund of funds models, overall charges will include underlying costs from each constituent fund as well as Architas’ management fees.

Architas offers a choice of six passive funds, each with a different risk profile to suit different investors’ needs:

• Architas MA Passive Reserve Fund – seeks to achieve capital growth and income with a low level of volatility (risk), having a risk profile of 2, in a range from 1 to 7 where 1 is the lowest risk and 7 the highest;

• Architas MA Passive Moderate Fund – seeks to achieve capital growth and income with a below median level of volatility (risk), having a risk profile of 3, in a range from 1 to 7, where 1 is the lowest risk and 7 the highest;

• Architas MA Passive Intermediate Fund – seeks to achieve capital growth and income with a median level of volatility (risk), having a risk profile of 4, in a range from 1 to 7 where 1 is the lowest risk and 7 the highest;

• Architas MA Passive Progressive Fund – seeks to achieve capital growth and income with an above median level of volatility (risk), having a risk profile of 5, in a range from 1 to 7 where 1 is the lowest risk and 7 the highest;

• Architas MA Passive Growth Fund – seeks to achieve capital growth and income with a moderately high level of volatility (risk), having a risk profile of 6, in a range from 1 to 7 where 1 is the lowest risk and 7 the highest; and

• Architas MA Passive Dynamic Fund – seeks to achieve capital growth and income with a high level of volatility (risk), having a risk profile of 7, in a range from 1 to 7 where 1 is the lowest risk and 7 the highest.

ARCHITAS MULTI-ASSET (MA) PASSIVE FUNDSThe Architas MA Passive range is designed to harness the advantages of investing in tracker funds with the investment scope enjoyed by multi-asset managers. The Architas MA Passive Fund range combines the diversification benefits of a multi-asset fund with the disciplined and systematic investment approach of index funds.


FURTHER INFORMATIONFor further information on the risks specific to each fund, please obtain a copy of the Key Investor Information Document (KIID) which is available at architas.com

52



The fund aims to generate these returns with relatively low volatility by investing a significant proportion of its assets in a variety of fixed income trackers. However, the fund also allocates to growth assets, such as UK and overseas equities – including a small exposure to emerging markets – and UK property.




The underlying funds will where practicably possible be passive funds, meaning they seek to track investment indices.






The actual investments of the Fund are not chosen by the risk modelling company and the ACD retains the discretion to select the Fund’s investments.


What sort of investor might invest in this fund?This fund is intended for investors looking for the potential of capital growth from their investments and may not be appropriate for investors who plan to withdraw their money within five years. Owing to the nature of the assets held, investors should be prepared to accept a risk of losses in the real capital value of their investment if they invest in this fund.









£10









ARCHITAS MA PASSIVE RESERVE FUND

53


Included in the IA Volatility Managed sector, this fund seeks to achieve capital growth and income with a below median level of volatility (risk), having a risk profile of 3, in a range from 1 to 7, where 1 is the lowest risk and 7 the highest.

The fund aims to generate these returns with below average volatility; therefore a relatively large part of its strategy concentrates on a variety of fixed income markets. However, the fund also allocates to growth assets, such as UK and overseas equities – including a small exposure to emerging markets – and UK property.









The Fund aims to take a below median level of risk in achieving its investment objective. The Fund’s investments are combined together in different proportions as determined by the ACD based on asset risk profiles set by an external risk modelling company. The riskiness of different combinations and proportions of types of investment are measured by predicting how they might behave over a 15 year period. The risk modelling company assigns each combination of assets to one of seven risk profiles, ranging from 1, which reflects the risk of holding cash in bank accounts, to 7, which is the riskiest profile. The Fund has a risk profile of 3, which means it will typically have a lower exposure to higher risk assets, and a greater exposure to lower risk assets than other funds in the Company which have a higher risk profile. Typically shares, certain types of bonds, or exposure to property/commodities will be classified as higher risk assets, whilst certain other bonds, cash and near cash (money market instruments, deposits and money market funds) will be classified as lower risk assets.












£10









ARCHITAS MA PASSIVE MODERATE FUND


54


Included in the IA Volatility Managed sector, this fund seeks to achieve capital growth and income with a median level of volatility (risk), having a risk profile of 4, in a range from 1 to 7 where 1 is the lowest risk and 7 the highest.

The strategy allocates to UK and international equities – including emerging markets – and UK property. This is balanced by exposure to fixed income with the objective of achieving attractive gains with average volatility.












What sort of investor might invest in this fund? This fund is intended for investors looking for the potential of capital growth from their investments and may not be appropriate for investors who plan to withdraw their money within five years. Owing to the nature of the assets held, investors should be prepared to accept a risk of losses in the real capital value of their investment if they invest in this fund.









£10









ARCHITAS MA PASSIVE INTERMEDIATE FUND

55


Included in the IA Volatility Managed sector, this fund seeks to achieve capital growth and income with an above median level of volatility (risk), having a risk profile of 5, in a range from 1 to 7 where 1 is the lowest risk and 7 the highest.

Overall fund returns may exhibit above-average volatility due to the focus on equities. In addition to investing in a combination of global stockmarkets – including emerging markets – the fund also allocates to fixed income and property to diversify investment risk.





















£10









ARCHITAS MA PASSIVE PROGRESSIVE FUND


56

* This is for Share Class R only. For information on other share classes, please refer to the prospectus of the fund.** Subject to a residual value of £500 per fund.† Negative value due to recent flows into the fund not being fully invested at the time of reporting.

Included in the IA Volatility Managed sector, this fund seeks to achieve capital growth and income with a moderately high level of volatility (risk), having a risk profile of 6, in a range from 1 to 7 where 1 is the lowest risk and 7 the highest.

Overall fund returns may exhibit moderately high volatility due to the focus on equities that includes a sizeable exposure to emerging markets. In addition to investing in a combination of global stockmarkets, the fund also allocates a smaller proportion of its assets to fixed income and property to diversify investment risk.









The Fund aims to take a moderately high level of risk in achieving its investment objective. The Fund’s investments are combined together in different proportions as determined by the ACD based on asset risk profiles set by an external risk modelling company. The riskiness of different combinations and proportions of types of investment are measured by predicting how they might behave over a 15 year period. The risk modelling company assigns each combination of assets to one of seven risk profiles, ranging from 1, which reflects the risk of holding cash in bank accounts, to 7, which is the riskiest profile. The Fund has a risk profile of 6, which means it will typically have greater exposure to higher risk assets than other funds in the Company which have a lower risk profile. Typically shares, certain types of bonds, or exposure to property/commodities will be classified as higher risk assets, whilst certain other bonds, cash and near cash (money market instruments, deposits and money market funds) will be classified as lower risk assets.







Portfolio Turnover Ratio (PTR) † -4.59%





£10









ARCHITAS MA PASSIVE GROWTH FUND

57


Included in the IA Volatility Managed sector, this fund seeks to achieve capital growth and income with a high level of volatility (risk), having a risk profile of 7, in a range from 1 to 7 where 1 is the lowest risk and 7 the highest.

Overall fund returns may exhibit relatively high volatility due to the focus on equities, emerging markets in particular. In addition to investing in a combination of global stockmarkets, the fund also allocates a small proportion of its assets to fixed income and property to diversify investment risk.


The Fund invests at least 70% of its assets in other funds (underlying funds), including funds which are traded on stock exchanges (investment trusts and exchange traded funds), other closed–ended funds and funds managed by the ACD or its associates.







The Fund aims to take a high level of risk in achieving its investment objective. The Fund’s investments are combined together in different proportions as determined by the ACD based on asset risk profiles set by an external risk modelling company. The riskiness of different combinations and proportions of types of investment are measured by predicting how they might behave over a 15 year period. The risk modelling company assigns each combination of assets to one of seven risk profiles, ranging from 1, which reflects the risk of holding cash in bank accounts, to 7, which is the riskiest profile. The Fund has a risk profile of 7, which means it will typically have greater exposure to higher risk assets than other funds in the Company which have a lower risk profile. Typically shares, certain types of bonds, or exposure to property/commodities will be classified as higher risk assets, whilst certain other bonds, cash and near cash (money market instruments, deposits and money market funds) will be classified as lower risk assets.


There is no guarantee that the Fund’s performance will reflect the behaviour of assets used to create the risk profile.










£10









ARCHITAS MA PASSIVE DYNAMIC FUND


59Architas Single Strategy Funds

• Architas Diversified Real Assets Fund – designed for investors looking to further diversify their portfolios away from traditional equities and bonds. The fund combines a range of alternative sub asset classes and specialist underlying investment funds.

• Architas Diversified Global Income Fund – aims to provide income together with capital growth. The fund is globally diversified, investing across a range of asset classes and geographies – including alternatives – in order to seek out the most attractive income opportunities available.

• Architas Multi-Manager (MM) Monthly High Income Fund – seeks to generate a monthly income by investing in a globally diversified portfolio of shares in companies, corporate and government bonds, and property.

• Architas Global Equity Income Fund – designed to produce a regular income by investing solely in equity funds across different geographies.

• Architas Positive Future Fund – seeks to achieve capital growth while investing at least 80% of its portfolio in investment funds which promote sustainable and responsible investment.

SINGLE STRATEGYFUNDSOur single strategy funds are a range of fund of funds which aim to meet a specific objective without being constrained to remain within a set risk target. This gives the fund manager greater flexibility to select underlying investments.


60

ARCHITAS DIVERSIFIED REAL ASSETS FUNDThe Fund seeks to achieve growth from a combination of income and capital growth.


The Fund invests at least 70% of its assets in other funds (underlying funds) including funds which are traded on stock exchanges (investment trusts and exchange traded funds), other closed-ended funds and funds which are managed by the ACD or its associates.

The underlying funds will mainly (meaning at least 50%) invest in a range of real asset classes, which may include infrastructure, commodities, inflation linked assets and specialist property (examples of which are transport facilities, telecommunication networks and water supplies).

The Fund may also invest directly or indirectly (through underlying funds) in a range of asset classes and financial instruments including limited partnership interests, shares, debt instruments (bonds) including those which can easily be converted into cash (money market instruments), freely transferrable rights to buy other investments at a future date (warrants), financial contracts that derive their values from those of other investment instruments or indices (derivatives) and deposits.

The Fund may also engage in stock lending, and borrowing.


The Fund may use derivatives to help achieve the investment objective (investment purposes) as well as to reduce risk or to manage the Fund more efficiently (often referred to as “efficient portfolio management”) What sort of investor might invest in this fund?This fund is intended for investors looking for the potential of income and/or capital growth from their investments and may not be appropriate for investors who plan to withdraw their money within five years. Owing to the volatile nature of the assets held, investors should be prepared to accept a risk of losses in the real capital value of their investment if they invest in this fund.


Available as OEIC, ISA, ISA Transfer

Retail shares Accumulation and Income






£10









Some of the fund’s portfolio is invested in non-mainstream assets, which during periods of stressed market conditions may be difficult to sell at a fair price, which may in turn cause prices to fluctuate more sharply than usual.* This is for Share Class D only. For information on other share classes, please refer to the prospectus of the fund.** Subject to a residual value of £500 per fund.+ All fees are charged to the capital of the fund, rather than to income, which may constrain capital growth accordingly.

61

ARCHITAS DIVERSIFIED GLOBAL INCOME FUNDThe Fund seeks to provide income together with capital growth.


The Fund invests at least 70% of its assets in other funds (“underlying funds”) including funds which are traded on stock exchanges (investment trusts and exchange traded funds), other closed-ended funds and funds which are managed by the ACD or its associates.

The underlying funds will primarily (meaning at least 70%) invest globally in shares; debt instruments (bonds) issued by companies, governments and other institutions; and alternative assets such as infrastructure and specialist property (examples of which are transport facilities, telecommunication networks and water supplies).

The Fund may also invest directly or indirectly (through underlying funds) in a range of asset classes and financial instruments including shares, bonds including those which can easily be converted into cash (money market instruments), freely transferable rights to buy other investments at a future date (warrants), financial contracts that derive their values from those of other investment instruments or indices (derivatives) and deposits.

The Fund may also engage in stock-lending and borrowing.

When investing directly in debt instruments, the Fund will favour investment grade securities (that is, securities with a credit rating of at least BBB- as rated by Standard and Poors, or Baa3 as rated by Moody’s), but the Fund may also invest in non-investment grade securities.


The Fund may use derivatives to help achieve the investment objective (investment purposes) as well as to reduce risk or to manage the Fund more efficiently (often referred to as “efficient portfolio management”). What sort of investor might invest in this fund?This fund is intended for investors looking for the potential of income and/or capital growth from their investments and may not be appropriate for investors who plan to withdraw their money within five years. Owing to the volatile nature of the assets held, investors should be prepared to accept a risk of losses in the real capital value of their investment if they invest in this fund.









£10









* This is for Share Class A only. For information on other share classes, please refer to the prospectus of the fund.** Subject to a residual value of £500 per fund.+ All fees are charged to the capital of the fund, rather than to income, which may constrain capital growth accordingly.

Architas Single Strategy Funds

62

ARCHITAS MM MONTHLY HIGH INCOME FUNDThe Fund seeks to generate a monthly income.


The Fund invests at least 70% of its assets in other funds (underlying funds) including funds which are traded on stock exchanges (investment trusts and exchange traded funds), other closed-ended funds and funds which are managed by the ACD or its associates.

The underlying funds will primarily (meaning at least 70%) invest in debt instruments (bonds) issued by companies, governments and other institutions, and debt instruments which can easily be converted into cash (money market instruments).

The Fund may also invest directly or indirectly (through underlying funds) in a range of asset classes and financial instruments including shares, bonds including money market instruments, freely transferable rights to buy other investments at a future date (warrants), financial contracts that derive their values from those of other investment instruments or indices (derivatives) and deposits.

The Fund may also obtain indirect exposure to property through investment in Real Estate Investment Trusts (REITs) and shares in property investment companies, and may engage in stock-lending and borrowing.

When investing directly in debt instruments, the Fund will favour investment grade securities (that is, securities with a credit rating of at least BBB- as rated by Standard and Poors, or Baa3 as rated by Moody’s), but the Fund may also invest in non-investment grade securities.


The Fund may use derivatives to help achieve the investment objective (investment purposes) as well as to reduce risk or to manage the Fund more efficiently (often referred to as “efficient portfolio management”). What sort of investor might invest in this fund?The fund is intended for those investors who are looking for a relatively high monthly income, and who also accept a modest risk of losses in the real capital value of their investments. The fund is intended for investment by long-term investors, with a minimum outlook of 5 years. Owing to the nature of the assets held, investors in the fund should be prepared to accept a modest risk of losses in the real capital value of their investments.









£10






Ex-dividend dates Last day of each month

Payment dates 15th of each month



63

ARCHITAS GLOBAL EQUITY INCOME FUNDThe Fund seeks to provide income with some capital growth.

Investment policy The Fund is an actively managed fund of funds.

The Fund invests at least 70% of its assets in other funds (underlying funds), including funds which are traded on stock exchanges (investment trusts and exchange traded funds), other closed-ended funds and funds which are managed by the ACD or its associates.

The underlying funds will primarily (meaning at least 70%) invest in the shares of listed companies from around the world which are expected to pay dividends.

The Fund may also invest directly or indirectly (through underlying funds) in a range of asset classes and financial instruments including shares, debt instruments (bonds) including those that can easily be converted into cash (money market instruments), freely transferrable rights to buy other investments at a future date (warrants), financial contracts that derive their values from those of other investment instruments or indices (derivatives) and deposits.

The Fund may also obtain indirect exposure to property through investment in Real Estate Investment Trusts (REITs) and shares in property investment companies, and may engage in stock-lending and borrowing.


The Fund may use derivatives to help achieve the investment objective (investment purposes) as well as to reduce risk or to manage the Fund more efficiently (often referred to as “efficient portfolio management”). What sort of investor might invest in this fund?The fund is primarily designed for investors who are prepared to accept the risk of investing in equities and who want either to take an income from their investments or to grow their investments by re-investing dividend income. The fund is intended for investment by long-term investors, with a minimum outlook of 5 years.









£10






Ex-dividend dates31 March, 30 June, 30 September, 31 December

Payment dates31 January, 30 April, 31 July, 31 October


* This is for Share Class A only. For information on other share classes, please refer to the prospectus of the fund.** Subject to a residual value of £500 per fund.+ All fees are charged to the capital of the fund, rather than to income, which may constrain capital growth accordingly.

Architas Single Strategy Funds

64

ARCHITAS POSITIVE FUTURE FUNDThe Fund seeks to achieve capital growth while investing at least 80% of its portfolio in investment funds which promote sustainable and responsible investment.

Investment policyThis Fund is an actively managed fund of funds.

At least 80% of its assets consists of units or shares in other collective investment schemes, including exchange traded funds (collectively “funds”) which pursue a stated sustainable and responsible investment objective, utilising at least one of the following four approaches:

1. Positive/best-in-class screening;

2. Integration of Environmental, Social, Governance (ESG) factors;

3. Sustainability themed investing;

4. Impact investing (investments that provide capital to address social or environmental issues).

The Fund is not constrained in respect of geography, asset type or sector. It follows a ‘multi-asset’ approach, meaning that it seeks exposure to different asset classes. It invests both in equity funds and in fixed income funds. The Fund may also invest in investment trusts that finance projects which address one or more of the UN’s Sustainable Development Goals.

(sustainabledevelopment.un.org/?menu=1300)

The Fund may invest in funds managed by the ACD or its associates.

The Fund may also invest directly or indirectly (through other funds) in a range of asset classes and financial instruments including in shares, debt instruments (bonds), financial contracts that derive their values from those of other investment instruments or indices (derivatives), other transferable securities and may also seek exposure to alternative asset classes such as real property.

In normal circumstances, up to 10% of the Fund may also be held in money market funds (funds that hold bonds which can easily be converted into cash), cash and deposits. The ACD has discretion to increase this limit in exceptional market conditions.

The Fund may use derivatives to reduce risk or to manage the Fund more efficiently (often referred to as “efficient portfolio management”). The Fund may only use derivatives to help achieve the investment objective (investment purposes) upon giving Shareholders sixty days’ notice.

What sort of investor might invest in this fund?The fund is intended for those investors who are looking for capital growth while also promoting sustainable and responsible investment. The fund is intended for investment by long-term investors, with a minimum outlook of 5 years. Owing to the nature of the assets held, investors in the fund should be prepared to accept a risk of losses in the real capital value of their investments.


Available as OEIC



Minimum lump sum investment*

£1,000,000 (which may be waived at the discretion of the ACD)




£10



Minimum balance*£1,000,000 (which may be waived at the discretion of the ACD)




Payment dates 30 June


* This is for Share Class S only. For information on other share classes, please refer to the prospectus of the fund.** Subject to a residual value of £500 per fund.

KEY CONTACTS

AUTHORISED CORPORATE DIRECTORArchitas Multi-Manager Limited1

5 Old Broad Street London EC2N 1AD United Kingdom

DEALINGArchitas Multi-Manager Limited1

PO Box 10939 Chelmsford CM99 2XU United Kingdom

Customer services: 0800 953 01972

Dealing: 0800 953 01972

Fax Dealing: 0844 620 0153

REGISTRAR AND ISA MANAGERArchitas Multi-Manager Limited1

5 Old Broad Street London EC2N 1AD United Kingdom

LEGAL ADVISERSEversheds Sutherland (International) LLP 1 Wood Street London EC2V 7WS United Kingdom

1 2 3 4

1 Authorised and regulated by the Financial Conduct Authority. Member of IA. 2 Monday to Friday 9.00am–5.30pm; calls may be recorded. Calls are free from landlines and mobiles within the UK.

DEPOSITARYState Street Trustees Limited3

20 Churchill Place Canary Wharf London E14 5HJ United Kingdom

INDEPENDENT AUDITORSErnst & Young LLP Atria One 144 Morrison Street Edinburgh EH3 8EX United Kingdom

FUND ACCOUNTING ADMINISTRATORState Street Bank and Trust Company4

20 Churchill Place Canary Wharf London E14 5HJ United Kingdom

5 6 7

3 Authorised and regulated by the Financial Conduct Authority. Member of Depositary and Trustee Association.4 Authorised and regulated by the Financial Conduct Authority.

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This document does not constitute an offer to sell or buy any share in the funds listed. Information relating to investments is based on research and analysis undertaken or procured by Architas Multi-Manager Limited for its own purposes and may have been made available to other members of the AXA Group of Companies which, in turn, may have acted on it. Whilst every care is taken over these comments, no responsibility is accepted for errors and omissions that may be contained therein. It is therefore not to be taken as a recommendation to enter into any investment transactions.

The Architas Multi-Manager Monthly High Income Fund is permitted to invest over 35% of its assets in securities issued by a single local, national or supranational government. Each fund can invest entirely in units of collective investment schemes.

The value of investments and the income from them can fall as well as rise and is not guaranteed which means your clients could get back less than they invest. These funds may not be appropriate for investors who plan to withdraw their money within five years. Past performance is not a guide to future performance. Changes in exchange rates will affect the value of investments made overseas. Investments in newer markets, smaller companies or single sectors offer the possibility of higher returns but may also involve a higher degree of risk. There is also the potential for delays in switching/disinvesting with some funds.

The AXA Group includes other fund management companies which we refer to as in-house managers, such as AXA Investment Managers, Architas Multi-Manager Europe

Limited and AllianceBernstein. We, Architas, may choose to include funds managed by in-house managers, which we refer to as in-house funds, in our multi-manager funds.

AXA also works closely with a select number of external fund managers which are referred to as strategic partners. These partners are selected on the basis of their strengths under certain criteria and we may choose funds from the strategic partners to make up our multi-manager funds. In the UK, we follow an in-depth research process that ensures that the funds selected for our multi-manager funds are included on the potential benefits they could bring to our Architas funds. We are not influenced by the AXA Group to include in-house or strategic partner funds over funds from other fund managers; funds are selected on their consistency to meet their objectives. We regularly review our selection of funds, including those from strategic partners and in-house managers, to ensure they continue to be appropriate and in your clients’ best interests.

More information about our use of funds from strategic partners and in-house managers is available at architas.com/inhousestratpartners/

If you require further information on any of our funds, the Key Investor Information Document (KIID) and the prospectus are both available free of charge on request from Architas Multi-Manager Limited.

The KIID is designed to help investors to make an informed decision before investing. You can view or download all our funds’ KIIDs via our website at architas.com

IMPORTANT INFORMATION

AXA is a worldwide leader in financial protection and wealth management. Architas operates three legal entities in the UK; Architas Multi-Manager Limited (AMML), Architas Advisory Services Limited (AASL) and Architas Limited. Both AMML and AASL are owned by Architas Limited, which is 100% owned by AXA SA (a company registered in France). Architas Multi-Manager Limited is a company limited by shares and authorised and regulated by the Financial Conduct Authority (Firm Reference Number 477328). It is registered in England: No. 06458717. Registered Office: 5 Old Broad Street, London, EC2N 1AD.

Architas Multi-Manager Limited 5 Old Broad Street London EC2N 1AD architas.com

ARC5152 • Expires 28 February 2021

The Architas Broker Desk is on hand to answer any Architas related queries.

Call 020 7562 4900 Monday to Friday 9.00am–5.00pm; calls may be recorded.

due diligence funds - architas · 2020-03-31 · due diligence this is for professional clients...

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