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Aviva Investors says turnaround will 'take time' on £1.4bn outflow

Aviva Investors says turnaround will 'take time' on £1.4bn outflow

Aviva Investors said attempts to turnaround the business will take time, as it posted a £10 million increase in operating profit over the year to July.

Assets under management stood at £234 billion at the end of June, down £6.2 billion on the year. Excluding the impact of the River Road disposal, funds under management decreased by £1.4 billion as positive market movements offset net outflows. It said this was primarily due to rotation out of global high yield, convertibles and emerging market debt.

Aviva Investors generated operating profit of £41 million to the end of June, representing an increase of £10 million on the previous year. The group attributed this to higher performance fees, as well as a £2 million contribution from the UK retail fund management business, which has transferred to Aviva Investors from UK Life. These were partially offset by lower revenues as a result of Sicav and hedge fund closures during the fourth quarter of 2013 and higher operating expenses.

The group is now headed by Standard Life Investments' Euan Munro (pictured), who is known as the architech of SLI's flagship Gars strategy. He has spearheaded a multi-asset absolute return range lauch, alongside Peter Fitzgerald and Daniel James, which he hopes can ultimately double the firm's profitability.

The group, noted: ‘The turnaround at Aviva Investors is, as previously communicated, likely to take time but the launch of the Aviva Investors Multi Strategy fund range is an important milestone.’

At the group level Aviva reported that its new business values rose by 9% to £453 million in comparison to £428 million in the first six months of 2013. Elsewhere, the company forecasted a £150 million hit to profits over the years as a result of the new 0.75% charge cap on default auto-enrolment pension schemes from 2015 and a ban on AMDs, where people no longer contributing to the scheme will pay higher charges than ‘active’ members, from 2016.

At 8:40 shares were down 1.21%, trading at 494 pence.

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