Amvescap, parent company of AIM Investments and former Invesco mutual funds, said on Tuesday that net outflows declined in the first quarter despite a 20% drop in pre-tax profits.

Amvescap agreed in September to pay $450 million to settle charges that it allowed improper trading practices in some of its funds. Net outflows for the quarter stood at $2.5 billion, compared with $7.6 billion in the last quarter of 2004.

The company said profits before tax  for the quarter fell 20% to $113.2 million. Once a dominant force in the Denver mutual fund scene, Invesco was folded into AIM in the aftermath of the trading scandal.

Amvescap said a weak U.S. stock market led to a decline in its assets under management, which totaled $375.4 billion in the first quarter, compared with $382.1 billion at the end of 2004.

James Robertson, the company's CFO, said it expected to see net inflows of funds by the end of 2005, but that this was unlikely to make up for earlier outflows for the year as a whole. "The underlying trend is getting better ... but that (outflows) is probably what we're looking at for the year as a whole," he told reporters on a conference call.

Analysts at Bridgewell Securities, worried about Amvescap's continued outflows, wrote in a research note, "If the company is broken up it may be worth more than the current share price; the risk for investors is that nothing happens, as this would make it very difficult for the successful managers to be retained within a business whose earnings will be flat at best for some time to come."

Amvescap said it expected to name a new chief executive by the middle of this year. The company said in February it would separate the roles of chairman and chief executive, both currently held by Charles Brady.

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