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 reasonable 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:
- Some of the evaluation criteria include sustainability of business growth, value creation and the 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.
- We try to balance between growth and value investments with bottoms up and top down approaches depending on business cycles and other macro-economic factors
- Risk is a very important factor of our evaluation criteria. We employ various business valuation techniques, scenario analysis and volatility analysis to ascertain if it is a reasonably safe investment, with an aim to reduce 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 outlook. 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.