He adds: “The net outflows number was less than £1bn and in actual fact is pretty respectable from an industry perspective. We had hoped for better in terms of where our business plan was but in an industry context it is not bad. We are in positive territory in terms of annualised net new revenue. Although we have seen funds flowing out, they are lower-margin funds than what we are bringing in – the quality of the business coming in is better than the business going out and we are generating more revenue from the assets we are managing.”
During Munro’s tenure, Aviva’s £5.6bn acquisition of Friends Life has added a degree of complexity to the business in terms of more funds to manage and more variants on different strategies. It will take some time before things die down, as a phased programme of bringing in assets and allocating them appropriately is scheduled to be completed in three years.
“By the end of 2018 we will have simplified the set of strategies that we are running with a clear, smaller set of the strategies that we are pushing to the outside world,” he says. “We will be focusing on income but letting people buy key capabilities, like global high yield and real estate manager of manager, convertibles and investment grade credit.
“It will be a range of componentry that will be available, while also building out our alternative income strategies, which is pulling together our expertise in infrastructure, real estate debt and corporate loans.”
Aviva Investors has made a number of hires in recent weeks, including Michael Grady as senior economist and strategist and Paul Parascandalo in its multi-asset funds team. Still, Munro sees any changes as “tactical additions” rather than wholesale change. As third-party assets grow, he plans to build the firm’s distribution and client servicing capabilities.
He adds: “Where I have really made the change is in my executive leadership team where there has been 100% turnover. The business had good investment capability but there was not the right leaders to translate that into commercial success.
“Previously Aviva Investors did not have an organising thought, it was a bunch ofstandalone capabilities. The only thing we can do now is be utterly consistent in terms of delivery of great investment outcomes and the delivery of the message, and people will come to view us in a different light.”
