Invesco AUM Dips in March

Zacks Equity Research

Invesco Ltd. (IVZ) reported a marginal decline in preliminary month-end assets under management (AUM.TO) for Mar 2014. The AUM for the month was $787.3 billion, down 0.5% from $791.2 billion at the end of Feb 2014.

Unfavorable market returns and net outflows in PowerShares QQQ were the primary factors behind the fall. Further, foreign exchange led to a $0.5 billion decrease in AUM. In March, Invesco’s preliminary average total AUM was $779.6 billion and preliminary average active AUM was $639.0 billion.

At the end of March, Invesco’s total equity AUM dipped 0.7% from the prior month to $388.0 billion. Further, balanced AUM was $54.6 billion, down marginally from $54.8 billion at the end of Feb 2014. Also, the company’s money market AUM declined 4.2% from Feb 2014 level to $76.1 billion.

However, Invesco’s fixed income AUM grew 0.9% from the prior month to $177.0 billion. Also, alternative AUM came in at $91.6 billion in the reported month, increasing 1.0% from the previous month.

Among other investment managers, Franklin Resources Inc. (BEN) announced preliminary AUM of $886.9 billion by its subsidiaries for Mar 2014, which marked a 0.5% rise from $882.2 billion as of Feb 2014. Further, Legg Mason Inc. (LM) is expected to announce its preliminary AUM for the month of Mar 2014 later this week.

Invesco’s operating leverage is likely to improve significantly over the long term, driven by cost control initiatives. Further, rebound in the equity market and improvement in global investment flows will act as catalysts. Nevertheless, the company’s high debt level and rising expenses remain concerns.

Currently, Invesco carries a Zacks Rank #3 (Hold). A better-ranked asset manager worth considering is AllianceBernstein Holding L.P. (AB) with a Zacks Rank #1 (Strong Buy).

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