Aviva 2002 Annual Report Download - page 28

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Operating review: Fund management
14 Aviva plc
Annual report + accounts 2002
Overview
Investing in equity markets was a frustrating business last year.
Investors in major stock markets typically experienced losses of
between 15% and 40% by the end of 2002. Although we
anticipate a gentle recovery in the global economy in 2003, we
expect the impact of difficult investment conditions to persist in
the short term.
In such conditions, Aviva’s in-house fund management expertise
is even more crucial to our business. We continuously strive to
generate superior investment performance on behalf of our
shareholders, policyholders and institutional clients. To that end,
we continue to develop our presence as a leading international
fund manager by making increased use of shared systems,
investment processes and research expertise across our operations.
Worldwide assets under management were maintained at
£208 billion (2001: £209 billion) as flows of new business
compensated for the impact of falling investment values.
However, the effect of lower markets on fee income saw
operating profit fall to £5 million (2001: £29 million).
UK
Morley Fund Management is our institutional fund management
operation, with assets of over £100 billion. We cover all the major
asset classes and specialise in actively managed funds.
As a major shareholder in many organisations we are actively
involved in issues of corporate governance. This includes talking
directly with companies in which we invest. We introduced several
new socially responsible investment (SRI) products during 2002 to
help institutional investors apply more social and environmental
investment criteria. We also launched our first US mutual funds
from our Boston office, which represents a step towards building
capability in the North American market.
The volatile markets during 2002 saw new business volumes in the
industry drop sharply, but we succeeded in securing £7.5 billion of
new external mandates (2001: £3.8 billion). In the circumstances,
and taking into account the impact of lower equity markets on fee
income, Morley’s operating profit of £4 million (2001: £25 million)
was a good result.
Building a
world-class fund
management
business.
£208bn
Worldwide assets under management