LGIM sees rise in AuM as profits decline

Legal & General Investment Management (LGIM) saw total assets under management increase 18% year-on-year in the first half of 2016, despite market volatility pushing its operating profit down 3%.

Total AuM for the period ended June 30 2016 came in at £841.5 billion, up from £714.6 billion a year prior, with retail AuM increasing to £21.4 billion from £18.9 billion.

LGIM's retail business saw external net inflows of £700 million, more than double the £300 million seen in the first half of last year, despite a "difficult market for investors".

Index funds saw net inflows of £1.6 billion, compared to £1.2 billion in H1 2015, though inflows into active fixed income fell to £1.3 billion from £2.3 billion. The real asset division also saw lower inflows of £100 million, compared to £400 million.

However, overall LGIM saw operating profits fall 3% to £171 million compared to £176 million year-on-year, while external net flows fell to £9.6 billion from £13.8 billion.

Despite this, management fee revenues rose 4% to £337 million, although transactional revenues were lower at £16 million, down from £23 million, as a result of fewer property transactions following a fair value adjustment of -15% to the L&G UK Property fund last month.

Despite this, the wider Legal & General group said LGIM is well positioned to handle global macro uncertainty going ahead as well as continuing fee pressure in asset management markets.

"Our five long-term growth drivers, ageing populations, globalisation of asset markets, creating real assets, welfare reform and digital remain unaffected and will continue to provide many growth opportunities,” said Nigel Wilson, group chief executive.

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