Top up – Aviva

We have been adding to our position in insurance business Aviva given the recent weakness in the share price and in our view an attractive prospective dividend yield. Following a dividend cut and change of leadership in 2013, the company is undergoing a rationalisation programme in order to improve returns and cash flows. This should result in sustainable dividend growth in the future.

In some ways we believe Aviva can start to emulate what has been achieved at fellow insurer Legal & General, where an increased focus on cash generation has led to significant dividend growth over the past several years. Additionally, the company also merged with Friends Life Group earlier this year and we see scope for meaningful cost savings to be delivered to further support profit growth as the business is integrated. Aviva remains a top 5 position in the portfolio.

Reduce – DS Smith

One position we have recently taken some profits in is paper and packaging group DS Smith. The management team has been instrumental in improving returns at the business, in part driven by the successful integration of a series of acquisitions, which included SCA Packaging in 2012. Consequently investors have enjoyed a growing dividend stream where we see scope for further growth in the future. However, given the strong performance of the shares this year we felt it prudent to recycle some of these profits into positions that have lagged, but we still retain a holding.

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