Aviva Investors’ Asian chief executive for equities and fixed income, Tahnoon Pasha, has sought to clarify what he sees as a misunderstanding over the firm’s streamlining drive.
Last month it emerged that UK insurer Aviva was to cut 160 jobs from its asset management arm in London, equating to about 12% of its global workforce. This forms part of a drive to focus on what the firm has identified as core strengths in fixed income, property and multi-asset funds.
Reports have correctly stated that the firm was seeking to scrap its European, emerging markets, global and sustainable and responsible investments equity desks based out of London.
But Pasha fears this has led to a misperception it is exiting equities altogether. “Our Asia offices will become the unique vehicle for that asset class [Asia-focused equities],” he says. “What the rationalisation means is a lot more prominence on what we’re doing in Asia in a global context.”
He acknowledges that emerging market equities as an alpha strategy is something Aviva is looking to exit, but stresses that it will continue to manufacture Asian equity capabilities out of Asia.
“The strategies we are retaining are the ones we believe we can then devote more resources to and allow them to flourish,” adds Pasha. “That is the backdrop from our perspective, but clearly it is not painless.”
He stresses that Aviva will focus on Asian core and income equity strategies, both MSCI- and FTSE-based, and add bespoke and absolute return capabilities for Asian equities on top.
Evidently the firm is making a distinction between alpha and beta, given that its quant and indexing desk in London will continue to provide exposure to emerging market equities.
Overall Aviva has 26 investment professionals in Asia, where it has a Singapore hub and a distribution office in Taiwan. It sold its office in Melbourne to nabinvest last September.
Around half work on equities and fixed income combined, while half are on real estate. But Pasha stresses the importance of cross-fertilisation and says all teams will increasingly be involved in multi-asset solutions. “That will be an important part of where you see things going in the future,” he says.
In terms of business development strategy, last July Aviva Investors hired Beng Eu Lim as head of institutional business development following the departure of Carolyn Lu at the end of 2010. Lim's role is to enhance the firm's offering for institutional clients while building relationships with both investors and consultants.
The firm also hired Patrick Chong, who is responsible for its business development strategy for the financial institutions sales channel in Singapore and Asia-Pacific.
Pasha says the firm is intent on targeting institutional assets. “There are parts of the investible market in Asia that we have barely touched, so we need to spend more time with the gatekeepers,” he says.
He confirms that Lim is in the process of building his team and that the firm will be ready to announce additional institutional sales hires soon.
But rather than streamlining negatively impacting its Asia business, Pasha is adamant: “Asia is going to be one of the key drivers for Aviva’s investment business. What this [streamlining] exercise means is that the Asia operation is becoming increasingly prominent.”
On the asset management side he points to increased emphasis on multi-asset and collaborative alpha strategies, while adding that Aviva also plans to invest more in supporting the needs of its insurance business in the region. “To me that is a pretty meaningful shift,” he says.
Asked about the profitability of Aviva’s Asia asset management business, Pasha replies: “At the moment we are delivering on budget. For us it is a marathon because we are a very new business.
“But the profitability level is not merely the objective, it is making sure we have the right infrastructure and product strategy in place and that we have enough contact with the client base. In terms of the metrics we are looking at for profitability in Asia, I see no cause for concern.”
In the middle of 2010 when Pasha was hired Aviva was talking about trebling its AUM in Asia to $35 billion by 2014, from $10 billion at the time. Its global AUM back then was around $362 billion.
As at September 30 last year its Singapore office managed $5 billion out of a global AUM of around $407 billion.