Euan Munro, Chief Executive Officer at Aviva Investors, speaks to Richard Romer-Lee of Square Mile about life in lockdown, ESG and where markets could go from here.
How are you adapting your business to the current climate?
It’s been quite remarkable that the whole industry has moved to a 100% working from home situation. I’ve overcome technical challenges and I’m a black belt in Microsoft Teams now. It’s interesting that few of us considered a disaster recovery scenario where we explicitly couldn’t all be together on one site. Facilities already in place for people to work from home have saved us more than a formal disaster recovery plan.
What challenges have you faced working remotely?
It’s hard to replicate creativity you get through interaction at work on a virtual meeting. It’s those chance conversations during a coffee break at a conference or walking around the dealing floor that trigger great investment ideas. I get energy meeting with clients and my people and I look forward to the day when we can return to working in the real world, rather than the virtual one.
What’s next for the stock market?
I’m not calling the bottom of the market. We’ve probably seen it, though we may have another look at the low points before we go on.
Many people have been quick to point out that we have not seen this level of collapse and growth since the Great Depression in the 1930s.
Our economy is suffering because we’re not being allowed to leave our homes
They are right, but back then people lost confidence and stopped investing. The cessation in economic activity today has not been caused by sentiment. Our economy is suffering because we’re not being allowed to leave our homes. I’m convinced that an awful lot of the drop in GDP will bounce back relatively quickly. I certainly want to eat in a restaurant as soon as I’m allowed, to get a haircut as soon as I can, and to buy some new clothes.
Of course it won’t bounce back to the levels of before – it will take a while to work our way out of this.
Do you think this experience changes our industry for the better in any way?
The crisis has highlighted the importance of ESG investing. ESG is all about encouraging responsible capitalism. Before this crisis there was a lot of attention on the ‘E’ – the environment. This won’t become less important. But the ‘S’ – the social side – is becoming increasingly important in the current circumstances. How companies have treated employees and customers through this crisis will be remembered for a long time.
Our Stewardship funds and Climate Transition funds have done better than general equity funds
Most ESG portfolios are underweight oil and energy so they have outperformed in this crisis. Our Stewardship funds and Climate Transition funds have done better than general equity funds.
What do you expect the biggest challenges to be in fund management over the next 12 months?
Building highly diversified, reliable income and drawdown propositions - and to do this in an uncertain and low interest rate world.
Many of the normal sources of income such as dividends are under stress.
Shareholders are anyone with a pension and not everyone with a pension is super rich
There’s a narrative that dividends are a bad thing at the moment, and that they serve only super rich shareholders. The reality is that shareholders are anyone with a pension and not everyone with a pension is super rich. Many people rely on those dividends for income. If companies are in a position where they can safely pay a dividend they should jolly well pay it. That money is then recycled back out into the economy, which needs to carry on.
Secondly, when you run a global firm and you cannot travel globally, it’s an issue. Lockdown has not gone on long enough yet to be a problem. But part of the glue that keeps all this together is international mobility.
What’s the headline you would most like to see on the front page of the FT?
The best headline would be “Vaccine for Covid-19 discovered and produced cheaply”. I’d also like to see “Crisis shines a light on the importance of ESG investing”.
What is your top tip for working from home?
Don’t work longer hours when you’re at home – I know I did in the beginning –and reward yourself with breaks. It’s unhealthy not to move all day.