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Legg Mason’s (LM) AUM Up in October, Net Inflows Recorded

Zacks

Legg Mason Inc. LM, headquartered at Baltimore, reported a marginal rise in assets under management (AUM), as of Oct 31, 2017, compared with the prior month. Preliminary month-end AUM came in at $755.2 billion, marginally up from September 2017.

October’s AUM displayed $2.3 billion fixed income inflows, equity outflows of $0.2 billion and liquidity outflows of $1.5 billion. Alternative flows were breakeven. Notably, negative foreign exchange impact of $2.1 billion was also an unfavorable factor.

Legg Mason’s equity AUM at the end of October 2017 moved up around 1.1% from the prior-month figure to $203.4 billion. Fixed income AUM moved up slightly from the previous month to $412.2 billion. However, alternative assets edged down moderately to $65.7 billion.

Rise in fixed income and equity AUM, partially offset by lower Alternative AUM, resulted in long-term AUM of $681.3 billion. The figure marked slight growth from the previous month. Additionally, liquid assets, which are convertible into cash, declined 2.1% to $73.9 billion.

Competitive Landscape

Among other investment managers, Franklin Resources Inc. BEN announced preliminary AUM by its subsidiaries of $750.7 billion for October 2017. Results displayed marginal fall from $753.2 billion recorded as of Sep 30, 2017. However, the figure moved up 3.8% from the prior-year quarter.

Invesco Ltd. IVZ announced an increase in its preliminary month-end AUM for October 2017. The company’s AUM came in at $928.4 billion, a rise of 1.2% from the prior month. The rise reflected favorable market returns, inflows in PowerShares QQQs and an increase in Money Market AUM, partially offset by net long-term outflows. Also, FX lowered October AUM by $2.8 billion.

T. Rowe Price Group, Inc. TROW announced preliminary AUM of $971 billion for October 2017. Results reflect 2.4% rise from $948 billion as of Sep 30, 2017. Client transfers from mutual funds to other portfolios of $2.5 billion were recorded in October 2017.

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 continued 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 27.3% so far, this year, outperforming 24.3% growth recorded by the industry.



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