Foreign and Colonial Asset Management (FCAM) said assets under management had fallen in the first half due to withdrawals by strategic partners and in its wholesale business.
The £4.5bn of investments that flowed into Foreign & Colonial (F&C) over the period were not enough to stop total assets under management dropping almost £2bn - or 1.9% - to £98.2bn.
The firm reported pre-tax profits of £21m, down from £22.6m the year before, and stuck with an unchanged dividend of 1p.
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In terms of investment performance, F&C said on a three-year basis 81% of fixed income and 51% of equity assets were above agreed client benchmarks.
In an impressive piece of understatement, the firm said "aside from the turmoil in the Eurozone, and in particular Greece, it was a relatively quiet six months geopolitically".
Going forward, F&C said it expected markets to remain challenging for some time.
Executive Chairman Edward Bramson called 2012 is "a transitional year", during which F&C was implementing new business strategies, re-sizing its expense base, and beginning to improve its capital position.
"In the first half of 2012 we have made major progress on all of these fronts," he said.
The group confirmed press reports that Charlie Porter will be stepping down as Chief Executive of Thames River, the firm it acquired in 2010. Porter's exit follows a few months after the departure of Thames River's Chief Operations Officer Jeremy Charles, who headed for the door in May. Porter will remain on the board as a non-executive director. His executive role will be taken by Michael Warren, F&C's investment director.
