Baltimore-based Legg Mason Inc. (LM) reported a rise in its assets under management (:AUM) as of Jul 31, 2013, compared with the prior month. Preliminary month-end AUM came in at $656.4 billion, up 1.8% from June-end.
Equity, fixed income and liquidity AUM were all up in the month under review. Notably, July AUM reflects the redemption worth $1.4 billion from a global equity mandate.
Legg Mason’s equity AUM as of July-end rose 3.5% from the prior month to $170.1 billion, while fixed income AUM inched up 0.4% compared with the prior month to $352.5 billion.
The rise in fixed income and equity AUM resulted in a long-term AUM of $522.6 billion, reflecting a 1.4% increase against the prior month. Liquid assets, which are convertible into cash, surged about 3.6% to $133.8 billion.
Among other investment managers, Invesco Ltd. (IVZ) announced a 3.4% rise in its preliminary month-end AUM for Jul 2013, which stood at $729.4 billion. Another firm - Franklin Resources Inc. (BEN) - declared preliminary AUM of $834.1 billion by its subsidiaries for the month of Jul 2013, reflecting an increase of 2.3% over the prior month.
We believe Legg Mason has the potential to outperform its peers in the long run, given its diversified product mix and leverage to the changing market demography. Moreover, a significant rebound in equity markets in the coming quarters would act as a catalyst.
However, in the near term, asset outflows will remain a significant headwind. Yet, owing to the restructuring initiatives and cost-cutting measures, we expect operating efficiencies to improve for Legg Mason and dividend payments to continue to inspire investors’ confidence in the stock.
Currently, Legg Mason holds a Zacks Rank #3 (Hold). Some better performing asset managers include Ameriprise Financial, Inc. (AMP) with a Zacks Rank #2 (Buy).
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