Old Life money calling the shots?
The back story to many 'ethical' Investment House offerings is that many of their funds under management came from old style life office policies, whether it be through pensions, or life assurance bonds. While it may seem at face value that executive management at the newer Investment Houses are calling the shots, could it be that the old life assurers are really the ones pulling management strings? I have heard rumour that upwards of 50% of funds in ethical OEICs could in fact be old insurance company money.
What impact could this have then on F&C when Friends Life (the rebranded Resolution) take all of the £25bn being managed by F&C? Could the £1.1bn in the Stewardship range being managed by F&C drop to less than £600m? Of course perhaps only management at F&C and Friends Life know the answer, but the second part of their strategic review may be indicative of the true impact of this 'assets under management' clawback.
What is Friends Life's ambition - Ethical?
Resolution have been involved in a game of purchasing old insurance company business and driving through costs savings. The aim has always been to sell on this business in 2013. Friends Life paid £2.75bn for AXA's UK insurance business in 2010, doubling the size of Friends Providents life business. They now have a stated intention of creating an asset management business out of their life business.
But could Friends Life, be also about to create waves in the 'ethical' fund management space? What if, in the interests of building up a substantial investment expertise, they see the Aviva SRI funds sale as an opportunity to enhance both their funds under management and provide the expertise to manage £600m or so (??) that they may be about to reclaim from F&C? The commercial logic would seem to make sense and the insurance arm of Aviva presumably would be comfortable with allowing Friends Life to manage policyholders money. £1.1bn from Aviva, plus say £600m from F&C - Friends life would become the biggest ethical investment player in the market over night. And if they do this, might Friends Life start consolidating the ethical fund market as well?
Just idle speculation..... and June may provide some answers.