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Legg Mason's (LM) April AUM Grows on Liquidity Net Inflows

Zacks Equity Research

Legg Mason Inc. LM reported 4.4% growth in assets under management (AUM) balance as of Mar 31, 2020, from the previous month. Preliminary month-end AUM came in at $763.1 billion, up from the March 2020 figure of $730.8 billion.

The company’s April AUM displayed $0.9-billion equity net inflows and alternative net inflows of $0.2 billion, partly offset by fixed income net outflows of $2.5 billion. AUM also included liquidity net inflows of $2 billion. Positive foreign-exchange impact of $1.5 billion was a favorable factor.

Legg Mason’s equity AUM at the end of April increased 12% from the prior-month figure to $180.5 billion. Fixed income AUM was up 2.7% sequentially to $431.6 billion. Further, alternative assets decreased 1% to $73.5 billion.

A considerable rise in equity and fixed income AUM, partially offset by a slight fall in alternative AUM, resulted in long-term AUM of $685.6 billion. The figure marked a 4.6% increase from the previous month. Also, liquid assets, which are convertible into cash, were up 3.2% to $77.5 billion.

Our Viewpoint

Legg Mason’s diverse product offerings and investment strategies are likely to continue attracting investors. These 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 29.1% over the past six months against a 15.6% decline recorded by the industry.

Legg Mason currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Competitive Landscape

Franklin Resources BEN announced preliminary AUM by its subsidiaries of $599.4 billion for April 2020. Results displayed a 3.3% increase from $580.3 billion recorded as of Mar 31, 2020. Lower net outflows and a strong market performance led to the upsurge. However, the reported figure dropped 16.8% year on year.

AllianceBernstein Holding L.P. AB announced preliminary April-end AUM of $576 billion, increasing 6.3% from the prior month. Total net inflows and favorable markets were primarily responsible for the rise.

Invesco IVZ announced preliminary April-end AUM of $1,118.6 billion, indicating a 6.2% increase from the previous month. The rise was driven by favorable market returns, which led to an increase in AUM by $63 billion. Further, FX increased AUM by $2.1 billion.

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