Aviva Investors plans to launch a low volatility absolute return fund as it simplifies its product offering following the arrival of Euan Munro as CEO, Investment Week can reveal.
Munro was one of the founding members of Standard Life Investments (SLI)’s Global Absolute Return Strategies (GARS) team, and as head of its global multi-asset arm was instrumental in its growth to a £20bn franchise.
He announced his departure from the group in July 2013, after three of his colleagues – David Millar, Dave Jubb and Richard Batty – left for Invesco Perpetual in late 2012 to build the rival Global Targeted Returns funds, launched in September last year.
Since stepping up to the helm of Aviva Investors in January, Munro has been talking to the market about his ideas for a new multi-asset strategy.
Munro does not plan to create an exact replica of GARS, but rather an ‘outcome-focused’ product investing across asset classes in a similar way to SLI’s offering.
“At Aviva Investors, we plan to simplify our investment offering and focus on products where we have a strong track record, and where there is anticipated client demand,” the group said.
“Our ambition is to move towards outcome with low volatility funds. Our new chief executive Euan Munro has a strong pedigree in outcome-orientated investing and it is not unreasonable to expect future offerings could include a low volatility absolute return fund.”
Aviva Investors already runs £50bn in multi-asset funds, of which around £30bn is managed by Peter Fitzgerald’s retail team, through core peer group managed funds, multi-asset funds, and risk-targeted solutions.
In an interview with Investment Week in December, Jeremy Leadsom, sales director for UK financial institutions at the group, said: “We want to get ahead of the curve, so it would be stupid not to think about using Euan’s expertise,” he said. “But we do not want to launch a ‘me-too’ product, so we will think carefully about doing anything.”
Meanwhile, some investors have expressed concerns over the size of the GARS product, claiming the £20bn giant cannot adapt to the changing economic environment as quickly as its smaller peers.
Buyers including GAM’s Charles Hepworth, have sold down GARS in favour of smaller alternatives.
Hepworth, investment director in charge of the DFM proposition at GAM, sold his stake in GARS in favour of Tim Bond’s £80m Odey Odyssey fund, a long/short global macro strategy launched in October 2011.
“GARS is getting bigger and bigger,” he said. “Although they seem to be able to manage it, the flexibility and nimbleness you need in that space is better served through a more boutique name.”
