Aviva Investors' operating profits tumble 11% on lower fee income

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Aviva Investors' operating profits tumble 11% on lower fee income

Aviva Investors' operating profits fell by 11% from £96m to £85m over the course of 2020 due to "lower fee income" over the year, according to the firm.

In its annual results statement, the firm also revealed its revenue decreased by 5% from £542m to £515m, which it said was the result of both lower contribution from securities lending and clients de-risking - with lower demand for alternative strategies generally - and their asset allocation decisions leading to lower margins.

This is despite the fact inflows into funds were positive at £208m, with £59.2bn of total inflows relative to £59bn of outflows.

Our strategy is to support Aviva becoming the UK's leading insurer."

Some £1.7bn of inflows came from outside of the business, while there was £8.3bn net inflows into liquidity funds and cash, and a further £11.4bn from positive market and FX movements. Assets under management at the end of the year stood at £405bn, with externally managed AUM increasing from £36bn to £40bn over the course of the year. Real asset and credit products proved most popular, seeing respective inflows of £1.8bn and £3.2bn. Overall, assets under management increased by £19.7bn over 2020.

Products were "not immune from market turbulence" according to the firm, however, with 55% of Aviva Investors' funds ending 2020 ahead of benchmark over one year.

Controllable costs decreased by 3% from £446m to £430m from cost management actions to mitigate the decrease in revenue.

The firm said: "Our strategy is to support Aviva becoming the UK's leading insurer and the go-to customer brand. By combining our insurance heritage and DNA with our skills and experience in asset allocation, portfolio construction and risk management, we provide a range of asset management solutions to our institutional, wholesale and retail clients.

We have a highly diversified range of capabilities, with expertise in real assets, solutions, multi-assets, equities and credit.

It added that its ongoing focus on ESG creates "easy ways for customers to do good", and thereby plays "an active role in the fight against climate change, creating a stronger economy and society as well as generating enhanced shareholder value over the long term."

"Concerns over the economic disruption caused by covid-19 led to significant volatility in financial markets and elevated levels of investor activity throughout 2020," Aviva Investors continued. "Notwithstanding the challenging market conditions, we had positive momentum in our Aviva client and external client businesses throughout 2020."