Aviva Investors’ latest attempt to overhaul its business, which will see it retool its equities desk around UK and global sustainable strategies, has been described as “commendable” but commentators think it will be a while before it can convince DFMs it has stabilised its brand amid further cuts to its investment team.
The Mail on Sunday revealed over the weekend Aviva’s asset management arm was preparing to sack 10 managers from its equities desk in a bid to slash costs.
Chief investment officer David Cumming (pictured) has already left the business “to pursue other opportunities,” while head of global equities Mikhail Zverev’s job is also thought to be on the chopping block.
In a statement to Portfolio Adviser Aviva Investors confirmed “a number of roles have been put at risk” in its equities team. Consultations with the impacted individuals have begun but the firm said it could not provide further details at this time.
The cull leaves Aviva Investors with just 25 fund managers. Reports suggest that 10 funds are expected to close from the shake-up.
“While our intention is to reduce the number of funds and prioritise products where there is a clear client and commercial rationale, this will be subject to a proper review and we will communicate more details in due course,” an Aviva Investors spokesperson said.
Aviva Investors retooling equities desk around sustainable investing
A spokesperson said Aviva Investors CEO Mark Versey, who replaced Euan Munro in January, had been restructuring the business around areas where it has a “competitive edge” and is “winning business”.
Alongside real assets, credit, multi-asset and retirement solutions, responsible investing was identified as a key growth area and as such, the asset manager plans to retool its equities business around sustainable outcomes.
“We have taken the decision to focus our equities business on sustainable outcomes and core strategies where there is clear client demand, namely UK and global equities, while retaining sufficient coverage to support our multi-asset strategies,” the spokesperson said.
“We have full confidence that we can deliver strong investment performance for our clients and achieve further growth in these areas, including through future fund launches linked to the Sustainable Development Goals.”
See also: Aviva Investors boss Euan Munro exits
Will take time to convince the market they are leaders in key growth areas
This is Aviva Investors’ second major overhaul in a matter of years, following former CEO Munro’s attempts to whip the business into shape.
When Munro joined in early 2014 “there was a clear hope” he could replicate his success at Standard Life Investments, said AJ Bell head of active portfolios Ryan Hughes. However with his departure earlier this year, “it’s clear that that ambition has not been delivered”.
“When researching and selecting investment solutions, we need to see clarity and stability and it’s likely that Aviva is going to take a long time before it is able to demonstrate this to the wealth manager market with its second major pivot in eight years,” Hughes said.
See also: Can Euan Munro restore Newton IM as a household brand?
While Versey setting out a clear vision for the business is “commendable” it “has to be backed with substance,” Hughes added.
“Right now, I would suggest that they have a lot of work to do to convince the market that they have a market-leading capability in the key areas Versey wants to focus on.”
Independent wealth expert Adrian Lowcock said while the changes to its equities desk make sense, they are likely to cause some disruption and “may deter investors in the short-term until they get a better understanding of the vision for the group and how that impacts investment performance”.
“But a quick and decisive change is probably better for the remaining team who can quickly put the disruption behind them and focus on the business going forward,” he added.
Aviva under pressure to cut costs
Lowcock noted the changes are in line with restructuring efforts at parent company Aviva by focusing on areas that are core to the business and getting rid of areas where value isn’t being added.
Aviva chief executive Amanda Blanc has been pulling the insurance giant out of markets in Europe and Asia since last summer in favour of the UK, Ireland and Canada.
It has been facing additional pressure to shore up costs since activist investor Cevian Capital acquired shares in the business.
According to The Mail on Sunday, Europe’s largest activist investor is pushing Aviva to slash £500m worth of costs by 2023. It currently owns a 5% stake in Aviva.
Before this latest restructuring Aviva Investors had suffered several departures this year, with infrastructure boss Ian Berry leaving with several team members for River and Mercantile and more recently Stephanie Niven defecting to Ninety One.
Last month it shut its UK Property fund after a near 15-month suspension period.
