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Legg Mason’s (LM) AUM Down in August, Net Outflows Recorded

Zacks

Baltimore-based Legg Mason Inc. LM reported a marginal fall in assets under management (AUM), as of Aug 31, 2017, compared with the prior month. Preliminary month-end AUM came in at $752.4 billion, slightly down from July 2017.

August’s AUM displayed $0.5 billion fixed income outflows, alternative outflows of $0.2 billion, equity outflows of $0.8 billion and liquidity outflows of $1.6 billion. Notably, negative foreign exchange impact of $0.4 billion was also an unfavorable factor.

Legg Mason’s equity AUM at the end of August 2017 moved down around 1% from the prior-month figure to $198.5 billion. Alternative assets edged down moderately to $65.6 billion. However, fixed income AUM inched up slightly from the previous month to $413.7 billion.

Rise in fixed income, AUM, partially offset by lower Alternative and equity AUM, resulted in long-term AUM of $677.8 billion. The figure marked slight growth from the previous month. Additionally, liquid assets, which are convertible into cash, declined 2% to $74.6 billion.

Competitive Landscape

Among other investment managers, Franklin Resources Inc. BEN announced preliminary AUM by its subsidiaries of $747.4 billion for August 2017. Results displayed around 1% fall from $752.7 billion recorded as of Jul 31, 2017. However, the figure inched up around 1% from the prior-year quarter.

Invesco Ltd. IVZ announced an increase in its preliminary month-end AUM for August 2017. The company’s AUM came in at $906.7 billion, a rise of 3.4% from $876.9 billion in the prior month. The rise reflected the Source acquisition (closed on Aug 18), favorable market returns, an increase in Money Market AUM, net long-term inflows and inflows in PowerShares QQQs. However, FX lowered the August AUM by $2 billion. Notably, excluding the acquisition, AUM inched up 0.4% from July.

Our Viewpoint

Legg Mason has the potential to outperform its peers over the long run, backed by a diversified product mix and leverage to the changing market demography. However, absence of consistent growth in equity markets and negative foreign exchange fluctuations remain headwinds.

Legg Mason currently carries a Zacks Rank #3 (Hold). Shares of the company have gained 27.7% so far, this year, outperforming 18.2% growth recorded by the industry it belongs to.



Among others, Ameriprise Financial, Inc. AMP with a Zacks Rank #2 (Buy) is worth considering, with the estimates witnessing upward revisions over the last 60 days.

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