Scottish Widows Investment Partnership(SWIP), the asset management arm of Lloyds, is shutting down a string of its regional investment desks with the loss of half its 38-strong management team, according to reports.
The move comes as part of a major reorganisation of its £54bn equities business, with some strategies shifting from an active to a passive investment approach driven by quant models.
The Times reports fund managers running "active" investment strategies in the UK, US and emerging markets are poised to be replaced by a single "global" team built around SWIP's quantitative equities team.
SWIP said the move comes in response to an increasingly clear divide between equity investors seeking high-alpha solutions and those preferring a lower-risk strategy through a quantitative-based approach.
According to the report, SWIP's 38-strong investment team will be dramatically cut with just 15 fund managers left after move. The redundancies are likely to include Peter Cockburn, the head of UK equities. SWIP said in total there will be an overall net reduction of 23 roles from the investment team.
Andrew November, SWIP's director of equities, has appointed his senior team who will drive forward the new equities strategy. Will Low continues in his role as head of global equities, which now includes responsibility for UK small cap, real estate securities and absolute return.
Sean Phayre continues to head up the quantitative investments team, which sits in SWIP's Investment Solutions business. The team, created in 2007, now manages in excess of £27bn on behalf of SWIP's clients.
SWIP said it is beginning the process of transitioning a number of funds to the new equities strategy.
"This process will take some months and will result in the closure of a number of smaller regional equity funds that no longer fit with the revised investment strategy, in addition to some funds that due to their small size are no longer economically viable for SWIP to manage," according to the group.
Some of the funds managed on behalf of customers outside Scottish Widows, which total more than £28.6bn, are also being handed back.
Dean Buckley, SWIP's chief executive, said: "With £143bn of client assets, SWIP recognises the changing needs of our clients and will offer solutions that fulfil their diverse investment needs.
"We remain committed to active fund management in those markets where we have confidence that we can generate strong investment performance and build long-term, valuable relationships with clients. However, for some of our clients, a lower-risk approach to investment is more appropriate for their needs."
The move has prompted further speculation Lloyds Banking Group is exploring plans to sell its Scottish Widows insurance division.
Sources familiar with the discussions told The Times a potential management buyout of the unit had been explored but was vetoed by executives at Lloyds.
It is understood management had tried to buy just under 50% of the Widows business, offering Lloyds the remaining stake and a potential profit from future earnings.
The job losses at SWIP come less than three months after a similar overhaul at Aviva's fund management arm, where 160 jobs were lost as it also cut back its active equities business.
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