Legg Mason AUM Rises In July, Fixed Income Inflows Recorded

Legg Mason Inc. (NYSE:LM) reported marginal growth in assets under management (AUM) as of Jul 31, 2019, from the previous month. Preliminary month-end AUM came in at $780.5 billion, up from the June 2019 figure of $780.2 billion.

The company’s July AUM displayed $0.1 billion fixed income inflows and alternative inflows of $1.6 billion, partly offset by liquidity and equity net outflows of $2.8 billion and $1.6 billion, respectively. Notably, alternative AUM recorded $0.1 billion of realizations. However, negative foreign-exchange impact of $1.4 billion was an unfavorable factor.

Legg Mason’s equity AUM at the end of July climbed 0.6% from the prior-month figure to $206.8 billion. Fixed income AUM was up slightly sequentially to $438.2 billion. Further, alternative assets increased around 2.3% to $71.7 billion.

Rise in fixed income, equity and alternative AUM resulted in long-term AUM of $716.7 billion. The figure marks a 0.4% increase from the previous month. However, liquid assets, which are convertible into cash, were down 4.1% to $63.8 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 21.7% over the last six months compared with 7.8% growth recorded by the industry.

Legg Mason currently carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Competitive Landscape

Among other investment managers, Cohen & Steers (NYSE:CNS) reported preliminary AUM of $63.1 billion as of Jul 31, 2019, up nearly 1.2% from the prior-month level of $62.4 billion. Market appreciation of $794 million and net inflows of $255 million were partly offset by a conversion of $119 million from certain institutional accounts to model-based portfolios (excluded from AUM) and distributions of $181 million.

Franklin Resources (NYSE:BEN) announced preliminary AUM by its subsidiaries of $709.5 billion for July. Results displayed slight decrease from the $715.2 billion recorded as of Jun 30, 2019. Net outflows and net market change led to this downside. Further, the reported figure went down 3.3% year on year.

Lazard Ltd. (NYSE:LAZ) recorded around 1.1% fall in preliminary AUM as of Jul 31, 2019, from the prior month. Total AUM came in at $234.8 billion, down from the June 2019 figure of $237.5 billion. July AUM displayed $5.5-billion market appreciation of $1.5 billion. These positives were partially offset by net outflows of $2 billion and unfavorable foreign-exchange impact of $2.1 billion.

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