diversification - Architas...Diversification means spreading the portfolio across different types of investment. Put simply, it’s not ‘putting all your eggs in one basket’. We

diversificationLevels of

Multi-Asset (MA) Active Funds

1Levels of diversification

LEVELS OF DIVERSIFICATIONAt Architas we believe that diversification is central to any investment portfolio. Being too concentrated in any one investment can possibly lead to higher risk and greater ups and downs in investment returns.

Diversification means spreading the portfolio across different types of investment. Put simply, it’s not ‘putting all your eggs in one basket’.

We spread investments by:

Using different asset classes

Investing in different geographic regions

Using several different investment managers

Why is diversification important?While there are no guarantees, this approach may reduce the combined risk of the overall portfolio and means that you are not relying on the performance of a narrow selection of investments. It may help to achieve more consistent investment returns than if you just invested in one asset class or with any one fund manager.

Past performance is not a guide to future performance. The value of investments and any income from them can go down as well as up and is not guaranteed, and you could get back less than you invest.

HOW DO WEDIVERSIFY?Diversification across asset classesThere are five main asset classes – money markets, bonds, property, alternatives and shares (also referred to as ‘equities’). By spreading investments across different classes, you could possibly benefit from more consistent returns than a fund which invests in only one.

It may help to reduce the ups and downs of investment returns, as the potential losses in one asset class could possibly be softened by gains in another.

Diversification within asset classesWithin each asset class it is possible to diversify further. Each one offers a range of investment options – for example across countries, industries, types of properties and bonds.

Spreading investment across countries, industries, types of properties and types of bonds helps to balance the overall portfolio.

Spreading it out even further within asset classes means that the portfolio is not concentrated in any one area and may help to reduce the effect of a downturn in a specific asset class or geographic region.

Diversification across investment managersOur funds invest in funds managed by other investment managers. This technique is commonly referred to as a ‘fund of funds’ structure.

Investment managers with different investment styles tend to perform better at different times under different economic and market conditions. We combine a range of investment managers with complementary styles using sophisticated techniques to make sure we achieve a spread of investments.

This means that the portfolio is not overly exposed to any one style and, as a result, when one investment style is out of favour, the overall portfolio is not affected in a significant way.

We use a selection of investment managers from a range of well-known firms including:

We have a dedicated and talented team of in-house professionals from across the financial industry. They constantly research, monitor and manage a combination of specialist investment managers across different asset classes to provide effective and diversified portfolios.

ARCHITAS INVESTMENT PROCESS

EValue, an external financial modelling company, provide asset allocation recommendations for each risk profile.

This gives, what we believe to be, the most efficient diversification across asset classes to achieve a level of return for a given amount of risk taken.

Here we need to choose underlying funds to fill the Architas funds across the asset allocation model.

We start by screening the investments available and come to a list of funds that could be suitable. We also aim to exclude managers that have been lucky with their performance rather than skilful.

1. DESIGNING INVESTMENTS AND ASSET ALLOCATION

2. FINDING FUNDS

• Investment aims and policies

• Asset allocation

• Finding skilful managers – not lucky ones

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Architas investment process

We research the quality of funds that make it to this stage in the process by using methods such as questionnaires or face-to-face meetings.

Funds that make it through the qualitative research are scored and sent to a fund approval forum for approval.

The approved funds are available for our fund managers to use to make up the Architas portfolios.

These funds (also known as the underlying managers) are monitored to make sure they are performing in line with our expectations.

If they are not, we may remove the fund from the buy list and replace it with a more suitable fund.

3. FUND SELECTION

4. BUILDING A PORTFOLIO

5. MONITORING AND RISK MANAGEMENT

What are the benefits of our investment process?We constantly monitor and review our investments. We do this by carrying out thorough research, constantly reviewing the investments and regular rebalancing (buying and selling funds to maintain the correct levels of each asset class). We monitor our underlying funds with the aim of making sure they perform as expected and do not take on risk we cannot justify.

• We carry out research focusing on the quality of investments

• We make a recommendation

• The fund approval forum approve the relevant funds

• Funds are selected making sure they complement each other within the portfolio

• We monitor funds and managers

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ARCHITAS MULTI-ASSET (MA) ACTIVE RESERVE FUNDThe 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.

DIVERSIFICATION ACROSS ASSET CLASSES

DIVERSIFICATION ACROSS INVESTMENT MANAGERS

DIVERSIFICATION ACROSS GEOGRAPHIC REGIONS

Past performance is not a guide to future performance. For details on how to assess the performance of this fund please refer to the important information at the end of this document.Due to rounding, the figures shown in each of the fund breakdowns may not add up to 100% and the allocations may change. Information from Architas, correct as at 30 June 2020.

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Architas Multi-Asset (MA) Active Reserve Fund

Bonds 50.65 %UK gilts 24.93 %UK corporate 6.26 %High yield 6.21 %Global convertible 6.09 %Global government 5.10 %Global 2.07 %

Other 49.35 %Cash - money markets 31.34 %Property 18.01 %

BlackRock ICS Sterling Liquidity 14.94 %HSBC Global Sterling Liquidity 14.17 %BlackRock UK Gilts All Stocks Index 10.02 %Vanguard UK Government Bond Index 10.01 %NN (L) Global Convertible Opportunities 6.09 %Barings Global High Yield Bond 6.03 %BlackRock Overseas Government Bond Index 5.10 %Liontrust Sustainable Future Corporate Bond 5.09 %Vanguard UK Long Duration Gilt Index 4.89 %Starwood European Real Estate Finance 3.23 %

Assura 3.09 %Civitas Social Housing 3.01 %Tritax Big Box 2.95 %Real Estate Credit Investments 2.88 %Primary Health Properties 2.85 %Cash 2.23 %PIMCO GIS Global Bond 2.07 %BlackRock Corporate Bond Index 1.17 %Vanguard UK Investment Grade Bond Index 0.18 %

UK 80.53 %Global 19.47 %

Funds are grouped according to their benchmarks. Global includes all funds which do not have a specific regional benchmark.

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ARCHITAS MULTI-ASSET (MA) ACTIVE MODERATE INCOME FUNDThe 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.





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Architas Multi-Asset (MA) Active Moderate Income Fund

Bonds 64.36 %UK gilts 29.02 %UK corporate 12.13 %Global 5.23 %Global government 5.05 %Global convertible 4.96 %High yield 4.93 %Global emerging market debt 3.05 %

Equities 31.24 %UK 12.81 %North America 8.16 %Global emerging markets 3.30 %Asia Pacific but not Japan 2.63 %Europe 2.26 %Japan 2.08 %

Other 4.40 %Cash - money markets 1.55 %Alternatives 1.51 %Property 1.33 %

UK 56.85 %Global 24.72 %US 8.16 %Emerging markets 3.30 %

Asia Pacific but not Japan 2.63 %Europe 2.26 %Japan 2.08 %

Vanguard UK Government Bond Index 12.17 %BlackRock UK Gilts All Stocks Index 11.88 %Liontrust Sustainable Future Corporate Bond 10.00 %BlackRock Overseas Government Bond Index 5.05 %Vanguard UK Long Duration Gilt Index 4.97 %NN (L) Global Convertible Opportunities 4.96 %Barings Global High Yield Bond 4.93 %LF Lindsell Train UK Equity 4.65 %Artemis Income 4.15 %AB - American Growth Portfolio 3.95 %Robeco Global Credits 3.10 %Vontobel Emerging Markets Debt 3.05 %TB Evenlode Income 2.97 %Vontobel Sustainable Emerging Market Leaders 2.16 %

BlackRock Corporate Bond Index 2.13 %PIMCO GIS Global Bond 2.13 %

Baillie Gifford Japan 2.08 %BlackRock Advantage US Equity Fund 2.03 %Architas Selection European Equity 2.02 %Fidelity Asia Pacific Opportunities 1.58 %John Laing Environmental Assets 1.51 %Brown Advisory US Mid-Cap Growth 1.17 %BlackRock Emerging Markets 1.14 %BlackRock Asia Special Situations 1.05 %J O Hambro Capital Management UK Dynamic 1.04 %UBS ETF Factor MSCI USA Quality 1.02 %JP Morgan Sterling Liquidity 0.99 %Tritax Big Box 0.59 %Cash 0.56 %Primary Health Properties 0.47 %Ediston Property Investment Company 0.27 %BlackRock European Dynamic 0.24 %


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ARCHITAS MULTI-ASSET (MA) ACTIVEINTERMEDIATE INCOME FUNDThe 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.




Past performance is not a guide to future performance. For details on how to assess the performance of this fund please refer to the important information at the end of this document.Architas MA Active Intermediate Income Fund awarded the Lipper Long Term (10y) Performance Award within Mixed Asset GBP Balanced.Due to rounding, the figures shown in each of the fund breakdowns may not add up to 100% and the allocations may change. Information from Architas, correct as at 30 June 2020.

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Equities 56.22 %UK 21.94 %North America 14.87 %Japan 6.06 %Asia Pacific but not Japan 6.02 %Europe 4.05 %Global emerging markets 3.27 %

Bonds 39.18 %UK corporate 18.81 %UK gilts 12.12 %Global government 3.46 %Global 2.91 %High yield 1.87 %

Other 4.61 %Alternatives 2.05 %Property 1.35 %Cash - money markets 1.21 %

UK 55.43 %US 14.87 %Global 10.29 %Japan 6.06 %

Asia Pacific but not Japan 6.02 %Europe 4.05 %Emerging markets 3.27 %

Liontrust Sustainable Future Corporate Bond 10.55 %LF Lindsell Train UK Equity 6.81 %TB Evenlode Income 6.48 %Artemis Income 6.23 %Baillie Gifford Japan 6.06 %Vanguard UK Government Bond Index 5.23 %BlackRock UK Gilts All Stocks Index 4.92 %AB - American Growth Portfolio 4.69 %Vanguard UK Investment Grade Bond Index 4.46 %BlackRock Corporate Bond Index 3.80 %BlackRock Overseas Government Bond Index 3.46 %Architas Selection US Equity 3.35 %Robeco Global Credits 2.91 %BlackRock Asia Special Situations A Acc 2.53 %Architas Selection European Equity 2.52 %Brown Advisory US Mid-Cap 2.50 %J O Hambro Capital Management UK Dynamic 2.42 %

John Laing Environmental Assets 2.05 %BlackRock Emerging Markets A Acc 1.99 %Vanguard UK Long Duration Gilt Index 1.98 %Man GLG Japan Core Alpha 1.96 %BlackRock Advantage US Equity Fund 1.94 %Barings Global High Yield Bond 1.87 %BlackRock European Dynamic FA Acc 1.53 %Fidelity Asia Pacific Opportunities 1.53 %BlackRock Edge S&P 500 Minimum Volatility ETF 1.38 %

Vontobel Sustainable Emerging Market Leaders 1.28 %

Cash 1.08 %UBS ETF Factor MSCI USA Quality 1.01 %Tritax Big Box 0.58 %Primary Health Properties 0.47 %Ediston Property Investment Company 0.30 %JP Morgan Sterling Liquidity 0.13 %


11Architas Multi-Asset (MA) Active Intermediate Income Fund

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ARCHITAS MULTI-ASSET (MA) ACTIVEPROGRESSIVE FUNDThe 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.





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Equities 79.09 %UK 31.64 %North America 20.02 %Japan 11.03 %Europe 7.02 %Asia Pacific but not Japan 5.24 %Global emerging markets 4.12 %

Bonds 19.34 %UK corporate 8.05 %UK gilts 7.74 %Global 3.05 %UK index-linked gilts 0.50 %

Other 1.58 %Property 1.28 %Cash - money markets 0.30 %

UK 49.51 %US 20.02 %Japan 11.03 %Europe 7.02 %

Asia Pacific but not Japan 5.24 %Emerging markets 4.12 %Global 3.05 %

LF Lindsell Train UK Equity 9.02 %Artemis Income 8.96 %Baillie Gifford Japan 8.25 %TB Evenlode Income 7.22 %Liontrust Sustainable Future Corporate Bond 7.08 %AB - American Growth Portfolio 7.06 %Architas Selection European Equity 5.47 %BlackRock UK Gilts All Stocks Index 4.10 %Architas Selection US Equity 4.04 %Vanguard UK Government Bond Index 3.63 %J O Hambro Capital Management UK Dynamic 3.48 %BlackRock Asia Special Situations 3.24 %Robeco Global Credits 3.05 %Ardevora UK Equity 2.98 %Man GLG Japan Core Alpha 2.78 %Vontobel Sustainable Emerging Market Leaders 2.60 %

Brown Advisory US Mid-Cap Growth 2.56 %BlackRock Advantage US Equity Fund 2.46 %Fidelity Asia Pacific Opportunities 2.01 %UBS ETF Factor MSCI USA Quality 1.97 %BlackRock Edge S&P 500 Minimum Volatility ETF 1.93 %

BlackRock European Dynamic 1.56 %BlackRock Emerging Markets 1.52 %Vanguard UK Investment Grade Bond Index 0.98 %Tritax Big Box 0.57 %Vanguard UK Long Duration Gilt Index 0.50 %BMO Commercial Property 0.43 %Ediston Property Investment Company 0.28 %JP Morgan Sterling Liquidity 0.19 %Cash 0.11 %BlackRock $ Treasury Bond 20+yr 0.08 %


13Architas Multi-Asset (MA) Active Progressive Fund

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ARCHITAS MULTI-ASSET (MA) ACTIVEGROWTH FUNDThe 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.





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Architas Multi-Asset (MA) Active Growth Fund

Equities 98.04 %UK 34.92 %North America 24.94 %Japan 14.32 %Europe 9.30 %Global emerging markets 8.26 %Asia Pacific but not Japan 6.30 %

Other 1.96 %Property 1.29 %Cash - money markets 0.67 %

UK 36.88 %US 24.94 %Japan 14.32 %

Europe 9.30 %Emerging markets 8.26 %Asia Pacific but not Japan 6.30 %

Artemis Income 11.07 %Baillie Gifford Japan 11.06 %TB Evenlode Income 8.87 %LF Lindsell Train UK Equity 8.85 %AB - American Growth Portfolio 8.18 %Architas Selection European Equity 7.72 %Architas Selection US Equity 4.92 %Vontobel Sustainable Emerging Market Leaders 4.15 %

BlackRock Emerging Markets 4.12 %J O Hambro Capital Management UK Dynamic 3.95 %BlackRock Advantage US Equity Fund 3.94 %Brown Advisory US Mid-Cap Growth 3.49 %

Man GLG Japan Core Alpha 3.26 %BlackRock Asia Special Situations 3.18 %Fidelity Asia Pacific Opportunities 3.11 %BlackRock Edge S&P 500 Minimum Volatility ETF 2.44 %

Ardevora UK Equity 2.18 %UBS ETF Factor MSCI USA Quality 1.97 %BlackRock European Dynamic 1.58 %Tritax Big Box 0.57 %Cash 0.47 %BMO Commercial Property 0.43 %Ediston Property Investment Company 0.30 %JP Morgan Sterling Liquidity 0.20 %


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ARCHITAS MULTI-ASSET (MA) ACTIVEDYNAMIC FUNDThe 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.





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Architas Multi-Asset (MA) Active Dynamic Fund

Equities 99.86 %North America 30.72 %UK 24.54 %Global emerging markets 23.39 %Europe 8.59 %Japan 7.56 %Asia Pacific but not Japan 5.06 %

Other 0.14 %Cash - money markets 0.14 %

US 30.72 %UK 24.68 %Emerging markets 23.39 %

Europe 8.59 %Japan 7.56 %Asia Pacific but not Japan 5.06 %

Vontobel Sustainable Emerging Market Leaders 11.00 %

AB - American Growth Portfolio 9.51 %Architas Selection European Equity 7.48 %BlackRock Emerging Markets 7.09 %LF Lindsell Train UK Equity 7.04 %TB Evenlode Income 6.83 %Baillie Gifford Japan 5.99 %Artemis Income 5.90 %Federated Hermes Global Emerging Markets 5.31 %Brown Advisory US Mid-Cap Growth 5.26 %Architas Selection US Equity 4.91 %

BlackRock Edge S&P 500 Minimum Volatility ETF 4.82 %

UBS ETF Factor MSCI USA Quality 3.19 %BlackRock Advantage US Equity Fund 3.04 %Fidelity Asia Pacific Opportunities 2.97 %J O Hambro Capital Management UK Dynamic 2.44 %Ardevora UK Equity 2.32 %BlackRock Asia Special Situations 2.09 %Man GLG Japan Core Alpha 1.57 %BlackRock European Dynamic 1.11 %Cash 0.14 %


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19Glossary

GLOSSARY

MONEY MARKETInvestors are usually very familiar with cash investments. These types of investments are not without risk as interest rates may be lower than inflation. However, they are usually lower risk than other asset classes and are normally very accessible (easy to cash in). Although, there is also a possible risk if the institutions go out of business.

PROPERTYWe can invest in companies which own and manage a range of properties. The value of property is a matter of the valuer’s opinion and not fact. Property will not contribute to diversifying your portfolio if you already hold a substantial percentage of your investments in property. There could be delays involved with property (disinvestments and switches) due to the fact that property can take time to sell.

SHARESShares of companies are a popular choice for long-term investors. As a shareholder you share in the value of the company’s assets through the share price and in the company’s profits by possibly receiving dividends.

ALTERNATIVESThe ‘alternatives’ asset class covers a range of investments.

The main parts are commodities (such as oil), hedge funds, absolute return funds (an absolute return fund aims to make positive returns by using investment management techniques and asset classes that differ from traditional funds), and infrastructure (such as communication and transport).

BONDSBonds are contracts that allow a number of investors to pool together to loan money to a company, government or other institution over a fixed term.

The holders of the bonds then receive interest payments over the length of the term and get their initial investment (capital) back at the end. Bonds are usually issued by banks on behalf of the borrowing institution. If the borrowing institution fails, there is a risk that you will not receive back either the interest due or your original capital.

GEOGRAPHIC REGIONIt is possible to invest in bonds, property and shares from different countries and regions across the world.

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IMPORTANT INFORMATIONPlain English Campaign’s Crystal Mark does not apply to the text on this page.

We will not accept any legal responsibility for any advice provided in relation to this document. We provide and manage the Architas funds and do not assess the suitability of our funds for individual investors. If any financial adviser, or network of advisers, is named on this document, it does not mean we have any knowledge of, or influence over, advice that you have received or will receive. Your financial adviser alone is responsible for any financial advice or recommendations provided in relation to your investment decisions.

Past performance is not a guide to future performance. The value of investments and any income from them can go down as well as up and is not guaranteed, and you could get back less than you invest.

The value of investments can fall as well as rise purely on account of exchange rate fluctuations.

The funds can invest entirely in units of collective investment schemes.

The MA Active funds do not have a benchmark. Investors can assess the performance of the funds by viewing the performance data of funds in the respective Investment Association (IA) sectors:

• MA Active Reserve Fund IA ‘Volatility Managed’ sector

• MA Active Moderate Income Fund IA ‘Mixed Investment – 0-35% Shares’ sector

• MA Active Intermediate Income Fund IA ‘Mixed Investment – 20-60% Shares’ sector

• MA Active Progressive Fund IA ‘Mixed Investment – 40-85% Shares’ sector

• MA Active Growth Fund IA ‘Flexible Investment’ sector

• MA Active Dynamic Fund IA ‘Flexible Investment’ sector

The IA is a trade body that represent UK investment managers and they group funds with broadly similar characteristics into sectors.

Each ‘sector’ contains funds with similar characteristics.

• The IA ‘Mixed Investment’ sectors contain funds with a similar level of exposure to shares/equities

• 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. Investors can find details of each sector’s performance at www.trustnet.com by selecting the respective ‘sector’ from the drop down menu.

We take charges to cover the costs of managing the fund. If you are investing using a financial product, the product provider may take extra charges, and, if so, should give you details of these charges before you invest.

You can invest in these funds through a number of financial products. These funds may not be appropriate for investors who plan to withdraw their money within five years.

If you need more information on any of our funds, you can ask us for a free copy of the Key Investor Information document (KIID) and the prospectus. The KIID is designed to help you make an informed decision before investing. You can also view or download all of our funds’ KIIDs from our website at architas.com, by following the Key Investor Information documents link from the home page and in the Literature Library.

The Active funds referred to in this document are all collective investment schemes authorised and regulated by the Financial Conduct Authority. 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 (AMML) is an investment company that provides access to other investment managers’ services through a range of multi-manager solutions, including regulated collective investment schemes. AMML in the UK works with AXA Group internal fund managers. To find out more about this please visit architas.com/inhousemanagers. 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.

ARC5153 • Expires 31 July 2021

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

The Architas customer support team is on hand to answer your questions.

Call 0800 953 0197 Monday to Friday 9.00am–5.30pm; calls may be recorded. Calls are free from landlines and mobiles within the UK.

Documents

diversification - Architas...Diversification means spreading the portfolio across different types of investment. Put simply, it’s not ‘putting all your eggs in one basket’. We