City of London Investment Group reported a half-year rise in profits of 7 per cent, despite a drop in assets under management (AUM).

The asset manager, which focuses mainly on emerging markets, saw its AUM fall 14 per cent from 3.5 billion on 1 June 2011 to £3 billion on 30 November 2011.

However, its revenues remained stable at £17.2 million and its profits rose to £6.1 million.

It was a difficult year for emerging market equities in 2011 but Barry Oliff, CEO of City of London, claimed its market neutral, frontier and developed CEF funds performed well and the group will step up marketing of those funds.

Oliff said the firm’s increase in profits was due to an attitude of ‘battening down the hatches’ against ‘adverse market conditions’ in a bid to control costs.

Andrew Davison, chairman of City of London, commented, ‘We have carefully and deliberately built our business to be resilient in the face of the sometimes extreme volatility inherent in investing in emerging and frontier markets around the world.’

‘Our aversion to risk has enabled us to build a loyal client base by being able to offer long-term benchmark outperformance in a risky asset class.’

In December 2011, City of London sent an open letter to BlackRock World Mining Trust, calling for stricter discount control from the trust, in which it holds a 7.1 per cent stake.

City of London, which took the unusual step of publishing such a letter to encourage other shareholders to join them, intends to oppose the continuation of the trust at the next annual general meeting if its demands are not met.