Aviva Investors ahead of schedule on Asia build-out

The UK asset manager is attracting Asian institutional clients to new and established strategies, but aims to boost its regional retail AUM and is mulling new products.
Aviva Investors ahead of schedule on Asia build-out

Aviva Investors may be a relatively late starter in the Asian asset management space, but it seems to be making rapid strides in building a presence in the region.

Largely an institutional player in Asia, the fund house – part of UK insurance group Aviva – says it has seen strong demand for its products from professional investors and is ahead of schedule in terms of building regional headcount.

There are 56 Asia-Pacific staff, including 28 investment executives across equity, fixed income and property. That follows a forecast in May last year by former Asia-Pacific CEO Craig Bingham that the firm would hit a regional headcount of 54 by the end of 2011.

The build-up of equity and fixed income investment desks is effectively complete, with a strong local-dealer capability, says Tahnoon Pasha, regional head of equities and fixed income and Singapore chief executive. “So we can, insofar as markets permit, follow the sun [in terms of trading hours],” he tells AsianInvestor.

More than 90% – or $4.5 billion – of the firm’s Asia-Pacific assets are in segregated accounts, and it hasn’t yet seen big inflows into its retail products, says Pasha, who joined in May 2010. But it plans to boost the retail portion through the financial institutions channel following the hire of Patrick Chong as regional head of financial institutions. 

Moreover, the fact that Aviva Investors is a relatively new brand in the region means new inflows will be a function more of its ability to communicate its presence than of the market itself, adds Pasha.

The recent divestment of the firm’s Australian equities division – which saw global head of business development Erich Gerth also become Asia-Pacific CEO to replace Bingham – reflects the firm’s desire to focus on growth businesses, he says.

“We realised the [Australian] business was languishing in some ways because we didn’t have the resources or desire to establish retail or research capabilities in a continent that size,” notes Pasha. “Also, we were struggling with the lack of global demand for an Australian product. It’s not something you can export particularly well.”

However, he reiterates Aviva’s commitment to the Australian property business and says it is in the process of building a subsidiary there. The firm has retained its institutional sales and direct real-estate investment presence in Australia.  

Elsewhere in the region, the firm’s real-estate business – which invests in listed and unlisted assets – has expanded. Its flagship regional Asia-Pacific property fund was approved in September for sale via restricted distribution in Singapore. It is a relatively unusual fund in that it invests directly in property but offers daily dealing; it has £311 million ($483 million) in AUM.

In terms of other new products, Aviva Investors in September launched a UK-managed global brand advisory strategy in Taiwan that it developed for a large local financial institution. The fund is predicated on the thesis that there will be increasing demand for luxury goods and has so far raised $60 million.

Aviva has also seen positive flows in Asia into its global high-yield bond product managed out of Chicago, although the strategy doesn’t own a lot of Asian assets.

“The global high-yield [bond] market here sits outside most high-yield benchmarks,” says Pasha. “So for some of the larger international funds, it takes an act of will to invest, and there are capacity issues for very large funds.”

However, there are interesting opportunities in this space, he says – for example, the firm would consider launching an Asia-Pacific high-yield fund in the future.

Other options are provided by the firm’s $100 million qualified foreign institutional investment (QFII) quota. It was awarded this year and has been spread among the fund manager’s equity and fixed-income segregated accounts. 

Aviva Investors would also consider launching a renminbi fund that would probably incorporate both equity and fixed income. “The ability to move between asset classes is something we would cherish,” says Pasha.

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