Legg Mason AUM Rises In October, Fixed Income Inflows Recorded

Legg Mason Inc. (NYSE:LM) reported marginal growth in assets under management (AUM) as of Oct 31, 2019, from the previous month. Preliminary month-end AUM came in at $791 billion, up 1.2% from the September 2019 figure of $781.8 billion.

The company’s October AUM displayed $1.8-billion fixed income inflows and alternative inflows of $0.3 billion, partly offset by liquidity and equity net outflows of $1.4 billion and $0.1 billion, respectively. Notably, alternative AUM recorded $0.2 billion of realizations. Further, positive foreign-exchange impact of $2.1 billion was a favorable factor.

Legg Mason’s equity AUM at the end of October advanced 1.9% from the prior-month figure to $207.1 billion. Fixed income AUM was up 1.5% sequentially to $449.3 billion. In addition, alternative assets increased marginally to $72.7 billion.

Rise in fixed income, equity and alternative AUM resulted in long-term AUM of $729.1 billion. The figure marks a 1.5% increase from the previous month. However, liquid assets, which are convertible into cash, were down 2.1% to $61.9 billion.

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. Nonetheless, absence of continued growth in equity markets and foreign-exchange fluctuations remain headwinds.

Shares of the company have gained around 10.1% over the last three months compared with 11.6% 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.

Competitive Landscape

Among other investment managers, Invesco’s (NYSE:IVZ) preliminary month-end AUM was $1,195.2 billion, up 0.9% from the prior month. This upswing stemmed from favorable market returns, and reinvested distributions. Also, favorable foreign-exchange movement boosted the month’s AUM by $5 billion. These were partly offset by outflows in long-term AUM, money market, and non-management fee earning AUM.

Franklin Resources (NYSE:BEN) has also announced preliminary AUM by its subsidiaries of $693.1 billion for October. Results displayed marginal increase from the $692.6 billion recorded as of Sep 30, 2019. Slight net outflows were offset by net market gains. Furthermore, the reported figure inched up 1.5% year on year.

Cohen & Steers (NYSE:CNS) reported preliminary AUM of $72 billion as of Oct 31, 2019, up 1.6% from the prior-month level of $70.9 billion. Market appreciation of $967 million and net inflows of $333 million were partly offset by distributions of $186 million.

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