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Invesco's September AUM Rise

Zacks Equity Research

Invesco Ltd. (IVZ) reported an increase in its preliminary month-end assets under management (:AUM) for Sep 2013. The AUM for the month was $745.5 billion, up 3.6% from $719.7 billion at the end of Aug 2013.

Favorable market returns, increase in money market AUM and positive long-term net flows primarily supported the growth. Further, foreign exchange led to a $6.1 billion increase in AUM.

In September, Invesco’s preliminary active AUM was $615.9 billion, up 3.7% from the prior month. Likewise, preliminary passive AUM rose 3.0% from Jun 2013 to $129.6 billion.

At the end of September, Invesco’s total equity AUM increased 5.7% to $353.2 billion from $334.2 billion at the end of Aug 2013. Moreover, fixed income AUM rose 1.5% from the prior month to $172.4 billion.

Invesco’s balanced AUM rose 3.5% to $53.5 billion in the reported month. The company’s money market AUM totaled $81.1 billion, rising 1.8% from the previous month. Moreover, alternative AUM came in at $85.3 billion in the reported month, increasing 1.2% from the prior-month level.

Notably, all the figures have been adjusted by excluding Atlantic Trust’s balanced AUM and equity AUM of $22.3 billion and $0.5 billion, respectively. The latter is to be sold to Canadian Imperial Bank of Commerce (CM) for $210 million.

Among other investment managers, Franklin Resources Inc. (BEN) announced preliminary AUM of $844.7 billion by its subsidiaries for Sep 2013, up 12.6% from the prior month. Further, Legg Mason Inc. (LM) is expected to release its preliminary AUM later this week.

Invesco’s operating leverage is expected to improve significantly over the long term due to the company’s cost-control initiatives. Additionally, meaningful capital deployment activities continue to enhance shareholder value.

However, we are concerned about the company’s high debt levels and rising expenses. Overall, Invesco is poised to benefit from improvement in global investment flows, given the company’s diversified footprint.
Currently, Invesco carries a Zacks Rank #2 (Buy).

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