Aviva Investors is planning to grow its business with a focus on multi-asset and private markets.
Speaking to FT Adviser, Mark Versey, CEO of Aviva Investors, said the two areas of focus for growth in the adviser and wealth management market were multi-asset and real assets.
Speaking about the multi-asset side, he said: “Around 97 per cent of the assets in DC pension schemes go into the default fund, which is a multi-asset strategy, so we feel we have core competency there.
“For the advice market, we think the differentiator is the range of assets. No longer is a traditional bond/equity allocation enough, and with the level of volatility in markets right now, the proactive management of the asset allocation is something we think is a differentiator.”
He explained Aviva has a core range and a plus range, with different price points.
For the advice market, we think the differentiator is the range of assets
The core range has exposure to passives, and so is cheaper, while the plus range uses active funds, and so has higher charges.
The third strand of the multi-asset product range is AIMs, an absolute return fund, which invests in multiple assets, but differs from the others in that it can also take positions.
The extra range of options means fees are higher.
Versey believes the defensive allocation right now is to be “neutral to underweight” to US equities, and to be overweight to income paying equities.
The focus on real assets, or what he called “direct economy assets”, is partly inspired by the Mansion House Compact, but also by the view that private assets “provide clients with diversification and potentially superior returns”.
Aviva have launched a Long Term Assets Fund (LTAF) for pension funds, and are working with the FCA to explore how the products can be made available to advised clients.
Versey said he believes the relatively illiquid nature of the products means they will only ever be suitable for clients receiving advice, and not for private clients.
He believes the potential for interest rates to fall from here will boost many of the sorts of assets that appear in such funds.
Aviva are also keen on office buildings, with Versey saying: “If you look across London you will see a lot of cranes. Demand for offices in prime locations is emerging from a recession, and at a time when we are at the top of an interest rate cycle.
“An area we are avoiding though is industrial property, there are idiosyncratic risks there, associated with the potential risk of tariffs.”
Within the business
Versey became chief executive of Aviva Investors in 2021, a period during which the wider Aviva Group was focused on selling businesses.
His focus with Aviva Investors was on “increasing efficiency within the cost base”.
This involved outsourcing many mid and back-office functions and, in one case, replacing 22 different providers with just one.
Versey said: “We now feel we have completed that work, at a time when many other asset managers are just starting to undertake it.”
He said the focus is now on “powering up the investment and distribution capability”.
“We want to be the best asset manager we can be for Aviva, but also to take the things we do for Aviva to external clients,” he said.
A huge slug of the £238bn of assets under management is run for the parent company, something Versey said gives his business “scale on fees and track record”.
“They also give us a lot of insight into what we should do, and not do. If we are thinking of launching something and it isn’t interesting to Aviva Group, then we would ponder whether we should be doing it”.
He hopes the future growth of the Aviva Investors business will come “50/50 from Aviva and external clients.”
david.thorpe@ft.com
