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Aviva axes top fund managers in race to win over green investors

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Aviva
Aviva

Aviva Investors is preparing to oust up to 10 top fund managers as the £350bn money manager focuses on environmentally friendly investments as part of a drive to win new business and cut costs.

Chief investment officer David Cumming has agreed to leave as part of a shake-up under the operation’s chief executive Mark Versey, who took over in January.

It comes as parent company Aviva, the FTSE 100 insurer, faces pressure from activist Cevian Capital to slash costs and hand back cash to ­shareholders.

The Anglo-Swedish investment firm revealed last week it had built up a 4.9pc stake in Aviva, making it the ­second largest shareholder behind Blackrock. Cevian is supportive of management’s turnaround efforts but said the business had previously been “poorly managed for several years”.

The Mail on Sunday, which first reported the cuts at Aviva Investors, said the head of global equities Mikhail Zverev is also expected to leave.

Alistair Way, head of emerging markets, will be promoted to the role of head of equities. It is likely that between eight and ten funds will be closed.

The move has stoked questions about whether Aviva Investors can hang on to its place in the market amid rising competition from tracker funds.

A spokesman for the business said: “Mark Versey has been clear on the need to focus on areas where we have a competitive edge and are winning business.

“We have taken the decision to focus our Equities business on sustainable outcomes and core strategies where there is clear client demand, namely UK and global equities, while retaining sufficient coverage to support our multi-asset strategies.

“As a result of this decision, a number of roles have been put at risk in our equities team, and we have begun consultations with the impacted ­individuals.”

The company said it is now focusing on investments aligned with the global push to cut carbon emissions as part of a City-wide rush into ethical investment.

In March, Aviva said it planned to become a net-zero carbon emissions company by 2040 and claimed this was the most demanding target set by any major insurer worldwide. Aviva Investors manages about £15bn of assets flagged as “sustainable”, such as in its Climate Transition Equities and Climate Transition Credit fund. It is seeking to grow that substantially by adding new products in the coming years.

The changes are expected to leave Aviva Investors with an equities team of about 25 fund managers. Equities account for about 8pc of its assets under management.

The move is likely to raise speculation about Cevian’s influence. Revealing its stake in Aviva last week, co-founder Christer Gardell said the insurer – which is on its third boss since 2018 – had suffered because “its high-quality core businesses have been held back by high costs and a series of bad strategic decisions”.

He added: “[Aviva] has the potential to become a focused and well-­capitalised market leader that produces profitable growth, generates significant cash, and is highly appreciated in the equity markets.”

Cevian wants Aviva to cut costs by more than £500m by 2023 – more than its current target of £300m.

The activist also wants Aviva to return to shareholders £5bn in excess capital it has built up after selling eight non-core businesses, piling pressure on chief executive Amanda Blanc.

Aviva has said it planned to return money to shareholders, but has not specified how much. A source close to the company said last week that Cevian started building its stake after the businesses’s strategy update last August, and has met with Ms Blanc several times.

It is understood to have been eyeing the company for more than a decade.

The activist backs Ms Blanc’s turnaround plans but has not ruled out seeking to appoint a director to Aviva’s board if it feels this is necessary.

Aviva said last week the company had “made significant strategic progress over the past 11 months and we remain sharply focused on further improving our performance”.

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