The asset and wealth management division at UK and South Africa-listedInvestec has expanded to account for nearly half of the group’s operating profit in the year to 30 April, up from 38.6 per cent in the year before.

The firm is in the process of realigning its business model towards less capital intensive activities by beefing up asset and wealth management. The strategy led to an increase in operating profit from these businesses of 2.8 per cent to £172.4 million ($273.5 million) during the company’s financial year ended 30 April 2012.

Funds under management in the wealth and investment arm stood at £34.8 billion at the end of April, up from £29.4 billion a year earlier. The firm said that the acquisition of the Evolution Group in December last year added around £7 billion of assets. The operating profit in wealth and investment fell by 4.2 per cent to £38.7 million.

Total funds in the asset management arm rose from £58.8 billion to £61.5 billion.

The group’s operating profit fell by 17.4 per cent to £358.6 million. "These results are disappointing but reflective of very challenging market conditions,” said Stephen Koseff, chief executive of Investec. “Our main businesses have continued to deliver with the overall picture being masked by legacy issues and a weaker performance from our investment activities”.

The group’s net interest income rose by 2.6 per cent to £699 million and net fees and commissions increased by 12.3 per cent to £884.2 million.

Earlier this week, Investec Asset Management launched new share classes across its UK-domiciled fund range in anticipation of the approaching Retail Distribution Review. The asset manager now offers a share class with a 0.75 per cent annual charge available to fund platforms and advisors.