Managing director and chief investment officer Andrew Fleming says: “Our ethical funds are doing very well and I think we have demonstrated that ethical is not second-best. You can get returns that are as good and in some cases better than investing in ordinary equities.”
He took the helm at Aegon Asset Manage-ment in 2005. “I say this with appropriate humbleness because investment is a very humbling business but I think we have called the cycle pretty well. We were early. We sold all our financials and banks a year ago in the first and second quarters of 2007. We sold our last Northern Rock shares at £7.50 and we switched our multi-cap equities portfolio from a small-cap bias to a large-cap bias.
“We hedged our risk positions at the end of last year so we were well hedged going into this year. But the hedges allowed us to maintain our risk positions going into March and April, which means we have been able to take advantage of the banks since March. We have also had a pro-overseas investment bias so we have been able to take advantage of sterling.”
Fleming accepts that life offices have not always had a great track record in asset management. “Historically, there is some truth in that because life companies and banks have not always understood what it takes to be successful in asset management. Big life companies and banks are risk-averse for a start. They tend to be hierarchical and they tend to be command and control structures because that is the only way you can run organisations of 30,000 to 50,000 people. Asset management companies are professional service organisations.”
However, Fleming does not believe that insurance companies will sell off their investment arms within the next 10 years.
“I think they will continue to have asset management arms because I do not think they could afford to outsource. Outsourcing asset management is extremely expensive and the interesting thing is that other companies are moving towards a fund management model. It uses less capital and it is fee-generating. Life companies have ad a bit of a resurgence.”
Fleming’s first job was in shipping, just to get to London, where he was offered three jobs in investment management. “Two of the jobs were with big successful investment management companies but I was also offered a job by Gartmore which then, in 1983, was by far the smallest, least well known of the three companies and I joined them as a trainee. I took the view that they would be the greatest opportunity.
Fleming found his niche in European equities at a time when there were just two Gartmore employees assigned to the area.
After two years, Fleming was called into the executive chairman’s office. “I had hardly spoken to him and he said, ‘Would you like to go and restart our Japan office for Gartmore?’ I went out for a week and thought I would give it a go.”
He was there for six and a half years and built a performance record in Japanese equities. “We won some very prestigious domestic accounts. It was a bit like being a 19th Century colonial administrator or soldier. The brief was go to distant parts of the empire and make something of it. It allowed me to show lots of initiative and get things done.” When Fleming returned to England, Gartmore had gone from less than £1bn under management when he joined to around £50bn but then the opportunity came up to join ABN Amro as global CEO.
“The opportunity was to create something that looked and felt like a global asset management company. It was extremely difficult, particularly dealing with the US.”
In 2005, he made the move to Aegon, and he has tired to provide the right conditions for competitive and creative people.
“I am the chief cultural officer. To keep and motivate good professionals, you have got to pay them properly but above all you have got to create the right professional environment where they feel valued and they feel they are able to practise their trade.”
Fleming loves investment management and remains at the coalface. He says current market conditions are driving demand for more conservative investments.
“There is strong demand for fixed income. The volatility in the markets has meant that quite a lot of people have been parking money in cash.”
But despite short-term nervousness in the UK, he still has his sights on the long-term objective and his outlook is very much global. “I think the great opportunity for Aegon is to create an effective global structure. There are some joint ventures in Asia, particularly in China and India, which are relatively early on in their development and initial signs are quite encouraging. Fundamentally, investing is a global activity. Even if you invest in UK small caps, it is useful to put those investments in a global context.”
Fleming is in the lucky position of truly enjoying his job. “I love this business and I consider myself to be extraordinarily lucky. I think it is a great privilege to be working in investment management.”
Born: Winchester, 1959
Lives: Surrey/Hampshire border
Education: University of York, BA in history
Career: 2005-present: Aegon Asset management CEO/chief investment officer; 1998-2004: global CEO, ABN Amro Asset Management; 1984-98: deputy CEO, Gartmore
Likes: Trees, most sports, fishing and collecting British/North European art
Drives: Volvo XC90
Book: Defeat in Victory: Battling Japan in Burma and India by William Slim
Film: The Seven Samurai
Album: Handel’s Julius Caesar sung by Dame Janet Baker
Career ambition: Aegon Asset Management closes key strategies business to preserve generating capacity
Life ambition: Catch a 30lb salmon
If I wasn’t doing this I would be… I would be a rare plant collector in the mountains of China/India