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TAKE PROFITS Aviva (AV.)

Close Aviva (AV.) at market (646p)

Aviva has delivered a very healthy return for our clients as the turnaround in sentiment towards the UK insurance sector has played out. The shares have benefited from improving profitability, a generous dividend, and the strength of the balance sheet. With the valuation now reflecting much of this progress, forward price to earnings has risen to around 11 and the price sits only a few percentage points below its twelve month high. Short term momentum has faded over the past quarter and on the price chart the shares appear to be forming a long term topping formation. As we approach the end of the year, it is a natural time to carry out some housekeeping in the portfolio and reassess positions that have already delivered, making sure our coverage stays aligned with the most compelling parts of the market.

Our house view is that locking in part of the gain here could be a pragmatic consideration for investors, as the position is now up more than 60% excluding dividends and the shares continue to provide an income rich profile with a yield above 6%. The business remains in solid financial shape with further dividend growth expected, however the easy gains from the recovery phase look to be behind us. Reducing exposure at this stage would allow capital to be redirected where potential upside appears greater, while still retaining a core holding should longer term progress continue.

Profit = 63.8% (Excluding dividends)

AV. Daily Candle Chart