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Legg Mason’s (LM) AUM Declines in May, Net Outflows Rise


Legg Mason Inc. LM reported a slight fall in assets under management (AUM) as of May 31, 2018, from the prior month. Preliminary month-end AUM came in at $747.2 billion, down from the April 2018 figure of $752.3 billion.

May AUM displayed $0.5-billion fixed income outflows, equity net outflows of $0.6 billion and liquidity net outflows of $5.4 billion, partly offset by $0.1 billion of alternative inflows. Notably, negative foreign exchange impact of $1.5 billion remained an unfavorable factor.

Legg Mason’s equity AUM at the end of May inched up 1.7% from the prior-month figure to $207 billion. Fixed income AUM dipped slightly sequentially to $414.6 billion. Further, alternative assets increased moderately to $65.9 billion.

Fall in fixed income, fully offset by rise in equity and Alternatives AUM resulted in long-term AUM of $687.5 billion. The figure marked slight rise from the previous month. Further, liquid assets, which are convertible into cash, moved down 8.6% to $59.7 billion.

Competitive Landscape

Franklin Resources BEN announced preliminary AUM by its subsidiaries of $732.8 billion for May. Results display a marginal rise from $732.5 billion recorded as of Apr 30. Acquisition of Edinburgh Partners Limited was primarily responsible for this increase. However, net market declines and net outflows during the month mostly offset the upside.

T. Rowe Price Group, Inc. TROW announced preliminary AUM of $1.04 trillion for May. Results reflect nearly 2% rise from $1.02 trillion recorded on Apr 30. Client transfers from mutual funds to other portfolios, including trusts and separate accounts were insignificant in May.

Invesco Ltd. IVZ reported preliminary month-end AUM of $977.3 billion for May. The figure reflects slight increase from the prior month. This rise has been mainly driven by favorable market returns, improvement in money market AUM, net long-term inflows and non-management fee earning AUM inflows. However, FX affected May AUM by $5.1 billion.

Our Viewpoint

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

Shares of the company have lost around 9.7% over the last six months against 0.2% growth recorded by the industry.

Legg Mason currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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