An economy drive at Merrill Lynch Investment Managers has boosted the fund manager's margins in the year's first quarter but failed to prevent a sharp decline in profits.

According to its holding company Merrill Lynch, MLIM increased its pre-tax profit margin to 17.3% from 16.8% year-on-year. Savings resulted from the outsourcing of US mutual fund accounting and the completion of amortisation of stock awards relating to the purchase of Mercury Asset Management more than three years ago.