Aviva Investors Chief Executive Officer Euan Munro created his first fund since starting in January, as part of a multi-asset strategy to increase profitability at the firm.
The investment arm of U.K. insurer Aviva Plc (AV/) opened its Multi-Strategy Target Return Fund that seeks an annual return of 5 percent above the Bank of England base rate over three-years, Munro told reporters in London today. The firm will initially invest 100 million pounds ($172 million) from existing funds.
“Profitability at Aviva Investors has not been very good,” Munro said at the press conference. “If we could get 10 to 20 billion pounds in the new strategy that would be transformational. Ten to 15 billion would double the profitability.”
Mark Wilson, who became Aviva group CEO 18 months ago, lured Munro from Standard Life Investments to revive profitability in the unit and mirror the performance of asset management arms of competitors including Prudential Plc. Munro helped create the Global Absolute Return Strategies fund, or GARS, that became Standard Life’s largest fund with more than 17 billion pounds in assets.
Aviva Investors contributed about 3 percent to the parent company’s operating profit in 2013. It oversees about 240 billion pounds in assets, most of which flows directly from the insurer. About 68 billion pounds is already invested in multi-assets, rather than a single asset such as equities.
“We have had more investment-consultant visits in the first three months of this year than all of last year together, Munro said. ‘‘It’s a leading indicator of business for new fund flows.’’
Munro will be an adviser to the new fund, which will have 20 to 30 different investment strategies. He will also head the newly created Strategic Investment Group, a companywide forum to provide fund managers with investment ideas.
Firms from Invesco Perpetual to Aviva Investors have sought to capitalize on the growing demand for multi asset investing, where money is deployed across asset classes from equities to infrastructure. Two-thirds of money managers expect multi-asset investment strategies will be the biggest contributor to growth in the next three years, according to a State Street Corp. survey last month.
Aviva’s Peter Fitzgerald, head of multi-assets, and Dan James, global head of rates, will oversee the new fund, the first of three planned by the firm. A second Target Income fund is expected in the fourth quarter and a third Target Inflation fund next year.
Aviva, the U.K.’s second-largest insurer by market value, is scheduled to hold a briefing for investors on July 9.
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