Aviva Pension Index Fund Changes - ESG Applied

GazzaBloom

Great info @londonadviser - thanks

It's the performance point that irks me, I choose index funds because I want to track an index not some committees bastardised version with their politics and agenda implanted on it.

It's my money.

However, the only fund I hold that is affected is the Aviva MyM Blackrock US Equity Index Tracker Pension Fund and as far as I can see none of the top 10 holdings are affected, and I would expect the performance impact to be minimal...but for full disclosure, it would be good if Aviva posted all the constituents of the index and the companies they are excluding.

londonadviser

I'll try not to rant, as I could go on about ESG for pages.... 

Aviva's ESG-lite approach will probably appeal to most policyholders who like the idea of investing a bit better. However, I agree that it's your money and you chose to track an index, which you will be unable to do. I think this will eventually apply to all Aviva's own or bought-in pension funds. (Search for Aviva Investors Baseline Exclusions Policy – Summary, as I can't paste a link).

I do believe that sustainable funds can perform well in the long term as we can't rely on oil and gas forever, and there is a chance that this forced sale of tobacco, coal and weapons across the industry will reduce the valuations of such companies, which could make sustainable funds even more attractive. This is my investment preference and I would never impose it on my clients, and some may not have the luxury of long-term investment.

Sustainable funds generally outperformed their non-ESG peers in 2020 (when airlines tanked and work-at-home tech snowballed) and have underperformed since the start of 2022 (energy crisis). Some investors are not comfortable with bigger ups and downs (more volatility = higher risk).

Avoid any knee-jerk reactions, as I would expect most businesses with a high workplace pension book to follow suit. Scottish Widows has already announced its intention to halve the carbon footprint of its investments by 2030 and achieve net zero in its investments by 2050. 

Just my opinion, not advice, etc.

jimjames

rockers said:

Thank you for making efforts in this regard. I have also asked for  a formal complaint form from Aviva - but they seem reluctant to send me one.

Aviva have now told me they won't be able to respond to my complaint in the required timescales as they have so many(!) so I have now escalated to the FOS.

I've also initiated the move of my current holdings to Vanguard where I can have the funds of my choice. I'll still be adding to the Aviva pension via my monthly contributions but it's a substantial amount I'm moving so at least that bit will be elsewhere. I'll also be able to compare performance of the 2 parts given a long enough period.

GazzaBloom

In my Aviva pension portal we can choose funds from the "Fund Supermarket" and so it's easy enough to find an alternative providers unadulterated index fund but the kicker is that fees are higher. Aviva's "Select Funds" which include the trackers that are affected by the ESG excluded companies have an AMC of 0.16% only and zero fund fees.

For example, if I chose the Vanguard US Equity Index the fund fee is 0.10% and the AMC is 0.26%

JohnWinder

. I'll still be adding to the Aviva pension via my monthly contributions but it's a substantial amount I'm moving so at least that bit will be elsewhere. I'll also be able to compare performance of the 2 parts given a long enough period.’

Not convinced such comparison gives any useful information. If the period is too short it may be the result of a quirk of returns such as bonds do better than stocks even though we know that long term stocks have returned more over many long term periods. If the period is long enough to be decisive, is there a following similarly long enough period for us to get the result which the just finished long enough period got? To put some numbers on ‘too short’ and ‘long enough’, I think we can find 15-20 year period(s) when bond returns beat stock returns. 

jimjames

Transfer to Vanguard has now completed so I only have a minimal value left with Aviva to keep it open for employer payments to continue being made into it. Complaint to Aviva is now with FOS but not had a response to that yet.

rockers

Well my letter from Aviva stated that the changes would be made in November 2023.
I have received no notification of any changes to ESG and checking the funds my pension is invested in -it remains unaltered.
Hopefully enough of us have complained to give them food for thought,

dealyboy

Given recent news regarding the Chief Executive it definitely looks as though Aviva have moved to the dark side ,,, better not upset Nigel  .

GazzaBloom

rockers said:

Well my letter from Aviva stated that the changes would be made in November 2023.
I have received no notification of any changes to ESG and checking the funds my pension is invested in -it remains unaltered.
Hopefully enough of us have complained to give them food for thought,

I don't think they are creating new funds to switch us to as such, just modifying the existing tracker funds listed in the letter to exclude some companies. You probably won't notice much if any real tangible change to returns, certainly in the Blackrock US equity tracker fund as the excluded companies are probably low down in the cap weightings in the index. But, as they have not been transparent and listed the companies being excluded that's a bit of a guess.

I'm leaving my portfolio as is.

rockers

I received a reply to my complaint. Obviously a boiler plate response repeating what they've already said.
They did say I could refer my complaint to my own company, but I think our bosses are savvy enough to deal with this. And my voice would be irrelevant  when most don't even bother looking at their investments or strategy.

So it'll be the Pensions Ombudsman next. But in the New Year.