Aviva follows a conservative and consistent long-term investment approach for security selection. The focus is to invest in quality businesses with sound business models at relatively inexpensive valuations and identifies leaders and emerging leaders of sectors.

Our investment rationale -

· We seek to invest in companies that, in our view, have sustainability of business growth and are trading at reasonable valuations.

· Our belief that a stock's price reflects the value of the underlying company makes us patient investors and not market timers.

· We consider the company's competitive advantage and its prospects along with a host of quantitative factors

· We aim to capture long-term business cycles while investing in securities. We follow a disciplined research, which will help identify new trends early.

With this approach, we generate consistent investment returns over the long-term through the power of compounding.

Our evaluation of potential equity investments is based on:

· Sustainability of business growth and its ability to generate free cash flows and higher Return on Equity (RoE)

· Quality of Management in terms of its vision, cost and innovation competence, along with business ethics and integrity

· Business Value and whether market price is at a discount to our estimate of the underlying business value. Besides, we also consider the number of price-value mismatches to ascertain if it is a reasonably safe investment, thus reducing the risk element

Fixed Income Strategy

· We invest exclusively in top quality, sovereign bonds and corporate bonds with AAA rating. Global and domestic macro-economic variables of growth, inflation, currency variations and liquidity are considered to determine the long-term and short-term trends. The portfolio's tenure is then adjusted according to our expectation of interest rate changes. We primarily focus on maintaining excellent credit quality, evaluating a company's ability to pay interest before investing.

Investment Process and Risk Management

· Aviva’s investment process is build around extensive research and strong risk control measures. Aviva’s investment process has strict investment guidelines that ensure we contain portfolio risk and run a diversified portfolio and have a rigorous in house research based approach to all our investments. The company is committed to adopt and maintain good fund management practices and a process based investment management.

· Aviva’s investment universe is governed by the stringent investment guidelines prescribed by IRDA. In addition to that, Aviva has in house prudent investment policies, which always ensures safety and stability of the investments.

· Aviva also has an integrated dealing system, which is used by Front office, Middle office & Back office to track dealing and exposure management. This system helps tracking the various exposure norms as prescribed by IRDA as well as internal guidelines.

· The investment decision process is guided by Board of Directors and then implemented by Investment Committee, which allows CIO & Fund managers to operate within approved limits.

Benchmarks

· Discipline is critical for managing funds over a longer tenure. We have, therefore, set different benchmarks for our funds, closely monitoring their performance against these benchmarks to ensure consistent returns over the long-term. Our aim is to provide higher returns than the benchmarks. For this, we have delegated CRISIL to design composite benchmark indices, reflective of the asset allocations of all our funds. These benchmarks are usually composite indices compiled by CRISIL and include the CRISIL Composite Bond Fund Index, CRISIL Liquid Fund Index, Nifty, BSE PSU and BSE 100.