What is a CIV or a CIS?

A collective investment vehicle is essentially a fund, where different investors’ money is pooled to invest in different securities. 

CIVs or CISs, as they are sometimes known, are Collective Investment Vehicles or Schemes established for the purpose of investing the pooled funds of investors (held as units or shares) in assets in accordance with investment objectives and investment policies published in a prospectus.

CIVs can incorporate the following structures:

• Real Estate Investment Trusts (REITS)
• Société d'investissement à capital variable (SICAV)
• Société d'investissement à capital fixe (SICAF)
• Exchange Traded Funds (ETF)
• Open Ended Investment Company (OEIC)

Who manages these funds?

Different CIVS are managed by different fund managers.

 What do the additional charges represent?

Where a fund invests in another fund, additional charges may apply which may vary depending on the specific investments in each fund. The Annual Fund Management Charge now shown includes the fund management charge applied by Aviva and also an estimate of any additional charges associated with the underlying investments of the fund. The estimated additional charges are based on recent available expense data for the investments and may change in the future.

Each CIV calculates a Total Expense Ratio (TER) at least yearly.

A TER typically includes expenses of the CIV such as:

• Management fees and expenses (including performance fees)
• Administration fees and expenses
• Custody fees and expenses
• Audit fees
• Transfer agency fees and expenses
• Distribution or marketing costs
• Legal fees
• Registration and regulatory fees
• Remuneration payable to the management company or investment manager (or other party) under any fee-sharing arrangement.

Total operating costs do not typically include:

• Transactions costs
• Interest on borrowings
• Payments in relation to financial derivative instruments
• Subscription/redemption charges or other fees paid directly by the investor
• Soft commissions

Are these new charges?

No, they are not new charges.

Where a fund invests in another underlying fund (or CIV) these charges have always been incurred.

 

Why does my fund invest in a CIV if it incurs an additional charge?

A fund manager may elect to invest in these funds where they believe they will deliver better risk adjusted returns or enhance diversification for the customer, for example:

• to gain exposure to specialist areas e.g Emerging Markets Bonds, where the fund manager does not have in-house capability. 
• to increases the asset diversification of the fund and reduce transaction costs through economies of scale of pooled investing.
• It may help provide liquidity for illiquid assets such as property.