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Legg Mason’s (LM) September AUM Declines


Baltimore-based Legg Mason Inc.’s LM preliminary assets under management (AUM) of $732.9 billion as of Sep 30, 2016 declined 1.2% from what it reported as of June 30 2016. This is because the company witnessed long-term outflows of $1.4 billion in the month.

Outflows in fixed income, alternatives and equity were $0.8 billion, $0.5 billion and $0.1 billion, respectively. Liquidity outflows amounted to $5.8 billion. However, there was positive foreign exchange impact of $1.1 billion.

Legg Mason’s equity AUM increased 4.5% over the June number to $168.4 billion. Also, fixed income AUM increased 2.5% from the same period to $396.9 billion. However, alternative assets, including AUM managed by Clarion Partners, EnTrustPermal, RARE Infrastructure and Permal Capital Management, edged down around 0.8% to $72.0 billion.

The rise in equity and fixed income, partially offset by lower alternative AUM, resulted in long-term AUM of $637.3 billion. This figure marked a 2.6% increase from the month of June. However, liquid assets, which are convertible into cash, plummeted around 21% to $95.6 billion.

Though foreign exchange fluctuations and absence of consistent growth in equity markets remain headwinds, we believe that Legg Mason has the potential to outperform its peers in the long run. The company’s diversified product mix and leverage to the changing market demography are expected to drive growth.

Legg Mason currently carries a Zacks Rank #3 (Hold). A better-ranked company in the finance industry is Fifth Street Asset Management Inc. FSAM, sporting a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Among other asset managers, Invesco Ltd.’s IVZ reported preliminary month-end AUM came in at $820.2 billion, a marginal decline from the prior month. Franklin Resources Inc. BEN reported preliminary AUM by its subsidiaries of $733.3 billion for Sep 2016, down roughly 1% from $740.1 billion as of Aug 31 and nearly 5% from $770.9 billion as of Sep 30, 2015.

Invesco currently holds a Zacks rank #2 (Buy), while Franklin carries a Zacks Rank #3.

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