Legg Mason (LM) February AUM Declines On Equity Net Outflows

Shares of Legg Mason Inc. (NYSE:LM) have declined about 3% following the announcement of its assets under management (AUM) for February 2020. The company reported 2.1% fall in AUM balance from the previous month. Preliminary month-end AUM came in at $789.4 billion, down from the January 2020 figure of $806 billion.

The company’s February AUM displayed $2.1-billion fixed income net inflows and alternative net inflows of $0.8 billion, partly offset by equity net outflows of $1.4 billion and liquidity net outflows of $1.6 billion. Negative foreign-exchange impact of $2 billion was an unfavorable factor.

Legg Mason’s equity AUM at the end of February declined 8.3% from the prior-month figure to $191.5 billion. Fixed income AUM was up slightly sequentially to $459.8 billion. Further, alternative assets increased marginally to $76 billion.

A considerable fall in fixed income AUM, partially offset by a slight rise in equity and alternative AUM resulted in long-term AUM of $727.3 billion. The figure marked a 2% decrease from the previous month. Also, liquid assets, which are convertible into cash, were down 2.4% to $62.1 billion.

Our Viewpoint

Legg Mason’s diverse product offerings and investment strategies will likely continue to attract investors, which along with improving AUM balance are likely to support revenue growth. Further, the company’s focus on expanding product offerings bodes well for the long term. However, continued equity AUM outflows may pose a threat to overall net inflows. Also, increased costs might dampen bottom-line growth.

Shares of the company have rallied 22.5% over the past six months against a 28.7% decline 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

Victory Capital Holdings (NASDAQ:VCTR) announced AUM by its subsidiaries of $142.4 billion for February 2020. Results display nearly a 5% fall from $150.3 billion recorded as of Jan 31, 2020.

Franklin Resources (NYSE:BEN) announced preliminary AUM by its subsidiaries of $656.5 billion for February 2020. Results displayed a 4.6% decrease from $688 billion recorded as of Jan 31, 2020. Net outflows and negative market returns led to the decline. Further, the reported figure dropped 8.1% year over year.

Invesco Ltd.’s (NYSE:IVZ) preliminary February-end AUM of $1,159.4 billion reflects a decline of 4.9% from the previous month. The decline was due to unfavorable market returns, net long-term outflows and net outflows in money market AUM, partly offset by net inflows in non-management fee earning AUM and reinvested distributions.

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