Aviva Investors’ revenue dropped 7% in the first half of the year despite adding £15.4bn to its assets under management.
The firm’s half-yearly report, published on Thursday, said £24.1bn of favourable market and foreign exchange movements over the period were offset by outflows of £5.5bn and £3.2bn of assets transferred to an external manager.
Total AUM stood at £346.1bn at the end of June compared with £330.7bn on 1 January.
Lower than average AUM hits revenue
But revenue was reported as £264m at the end of June, down from £284m for the previous year. The firm blamed the drop on lower average AUM compared with the prior period and the disposal of an indirect real estate multi-manager business and its interest in the management of a pan-European commercial property fund.
Assets under management and administration, which includes all assets managed by Aviva Investors and third parties, stood at £379.7bn on 30 June, up from £359.8bn in 2018.
It was a similar story for rival asset manager Standard Life Aberdeen earlier this week which reported its AUM had increased 5% from £551.5bn to £577.5bn over the same six-month period. But AUM was down from £592.1bn in H1 2018 and fee revenue was £815m in the latest results compared with £966m for the same period last year.
Aviva Investors said: “Despite challenging external market conditions, our investments in growing investment capabilities are making positive progress and we have experienced consistently improving investment performance in 2019.”
It also noted external client wins which had not yet funded at 30 June, particularly in real assets, and a win of $2.15bn (£1.77bn) in US credit which funded in July 2019.
‘I’m not thrilled’
The wider Aviva group posted a 1% increase in operating profit to £1.45bn and operating earnings per share up 2% to 27.3p.
In a video posted on the Aviva website, group chief executive Maurice Tulloch (pictured) said: “I think the numbers are okay, I’m not thrilled. But listen, definitely the markets are tough. We did enter this year with some headwinds.”
Tulloch also said in the published results that Aviva is reviewing the strategic options for its Asian businesses, including the possibility of a sale.
The Share Centre investment research analyst Ian Forrest said: “The response to the news from the market this morning was muted with shares up just 0.6% in early trading. They are trading near the bottom of their range over the past three years and it will be interesting to see the details of further restructuring and targets when the company reveals them in November.”
