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Legg Mason AUM Rises in July, Fixed Income Inflows Recorded

Zacks Equity Research

Legg Mason Inc. 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 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 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. 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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