So it is, perhaps, as well that Munro looks to be delivering, with profits up 47% at Aviva Investors in the first half of this year to £49 million. Net inflows of £1.7 billion for the six months helped assets under management rise to £319 billion.
That is progress, albeit from a low base – listed rival Schroders made £294 million profits on a similar level of assets. Munro concedes: “We are not in the top quartile [for profit margins] or anywhere close to it,” but adds: “The key metrics are getting better.”
Aviva group has charged him with keeping profit growing at “double-digit” percentages, but it won’t be 47% every half-year, he says.
Positive sales in the first half of this year were a strong signal, he argues: “A lot of rivals were losing assets, and we were gaining. This is a change for Aviva Investors – the supertanker is starting to turn.”
With his hand firmly on the tiller, Munro is turning his attention to the next part of his plan: alternatives and illiquid private debt.
Aviva Investors manages £20 billion in private debt, in a range of infrastructure, corporate lending, real estate debt and secured financing funds. But this is cash that belongs mainly to its parent company Aviva, which uses the assets to back its annuity portfolios.
Unlike some rivals – notably Legal & General and the Prudential – Aviva has not had enough success in turning its debt management capabilities into a revenue-generating service offered to outside investors. Munro wants that to change.
The firm is shortly to hit the road with an innovative new fund – a multi-asset alternative debt product. To be known as the Alternative Income Solutions Fund and launching either late this year or early next, it will lend to real estate owners, infrastructure projects and companies according to where the best returns are on offer at the time. The idea is to generate a stable stream of often inflation-linked income.
He has been laying groundwork. One of his first senior placements was Mark Versey, previously chief investment officer at Friends Life Investments, recruited in April 2014.
In November of that year, Munro lifted the real estate lending unit – led by Barry Fowler, who joined from Lloyds Banking Group the previous July – out of Aviva’s life company and folded it into Aviva Investors, reporting to Versey.
And in March this year, Fowler was made head of alternative income, overseeing the whole of the £20 billion private-lending unit, now known as Alternative Income Solutions.
Private debt is currently popular with investors – 51% of them plan to put in more money in over the next 12 months, according to Preqin’s latest investor survey. Fund managers are on the road looking for $ 146 billion, but a multi-asset lending fund will stand out.
BlackRock launched a similar fund back in June but, according to investment consultants, they are not common. Luba Nikulina, global head of manager research at Willis Towers Watson, said: “Demand still outstrips supply, and these products and strategies are quite unusual in the market.”
Versey said: “We are doing £3 billion of new loans per annum – of that you are looking at £2 billion from Aviva and £1 billion from external clients. We want to grow this to above £5 billion, which would mean £3 billion a year from external clients.”
As a former insurance CIO, Versey says he understands these investors’ “frustrations” that capital does not get deployed fast enough in illiquid strategies – and being able to invest across the full spectrum of private debt markets is a way to address this.
Aviva Investors is offering co-investment alongside Aviva, to ensure clients get access to the best deals. Munro said: “We can originate these complex deals, but we have skin in the game.”
Versey added: “This is a good liability-matching asset class: it’s not a risky growth strategy. This is buy and hold for 20 to 25 years.”