Aviva outsources fund management to DBS and others

The Singapore arm of UK-based insurer Aviva has outsourced as much as S$3 billion ($1.8 billion) to two external managers, and plans to outsource more this year, says Keith Perkins, Singapore-based CEO.

The deal is a result of Aviva sister company Morley Fund Management closing its Singapore office last year. Morley had previously managed the Aviva assets.

"We had a choice," says Perkins. "We could either outsource it, or develop our own expertise in-house." But the firm was wary of relying on just a single small team of managers, and it lacked the scale to justify the IT, compliance and other costs.

Aviva conducted a beauty parade among 10 fund managers and from a shortlist of four, gave one mandate to DBS Asset Management, and a second mandate to an undisclosed manager.

DBS-AM will be responsible for S$1.3 billion ($790 million) in global and local fixed income.

Perkins declined to say how large the second mandate was, except that is "big". Aviva now has around S$3 billion of assets in Singapore and will be outsourcing the lot. "Our other fund manager is an expert in risk-based capital management and in alternative investments," Perkins notes.

Because he expects the firm's steady growth, particularly via bancassurance, to continue this year, Perkins says Aviva's asset size could hit S$5 billion by the end of the year, necessitating additional mandates. He says the firm will consider all asset classes, traditional and otherwise, with mandates based in a framework of risk-based capital.

Greg Seow, executive chairman at DBS-AM, says the mandate brings the fund house's total AUM to S$12.6 billion, and represents a major coup. "It's also an opportunity to leverage our investment expertise to enhance Aviva's insurance products."