Legg Mason (LM) December AUM Up on Fixed Income Net Inflows

Legg Mason Inc. LM reported 1.6% growth in assets under management (AUM) balance as of Dec 31, 2019, from the previous month. Preliminary month-end AUM came in at $803.5 billion, up from the November 2019 figure of $790.5 billion.

The company’s December AUM displayed $1.3 billion fixed income net inflows, alternative net inflows of $0.8 billion and liquidity net inflows of $3.7 billion, partly offset by equity net outflows of $3.6 billion. Also, positive foreign-exchange impact of $2.7 billion was a favorable factor.

Equity outflows included previously reported $2.8 billion redemption and realizations worth $0.3 billion.

Legg Mason’s equity AUM at the end of December climbed 0.6% from the prior-month figure to $214 billion. Fixed income AUM was up 1.5% sequentially to $451.8 billion. Further, alternative assets increased 2% to $74.3 billion.

Rise in fixed income, equity and alternative AUM resulted in long-term AUM of $740.1 billion. The figure marks a 1.3% increase from the previous month. Also, liquid assets, which are convertible into cash, were up 6.2% to $63.4 billion.

Our Viewpoint

Legg Mason’s diverse product offerings and investment strategies will continue to attract investors, which along with improving AUM balance, are likely to support revenue growth. Further, the company’s focus on expanding product offerings bode 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 32.1% over the past year, outperforming 9.6% 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

Cohen & Steers CNS reported preliminary AUM of $72.2 billion as of Dec 31, 2019, up 1.4% from the prior-month level. Net inflows of $639 million and market appreciation of $818 million were partly offset by distributions of $443 million.

Franklin Resources BEN has announced preliminary AUM by its subsidiaries of $698.3 billion for December 2019. Results display 1% increase from the $691.3 billion recorded as of Nov 30, 2019. Net market gains were partly offset by net outflows. Further, the reported figure climbed 7.4% year over year.

Invesco Ltd. IVZ recorded 2% rise in preliminary AUM as of Dec 31, 2019, from the prior month. Total AUM came in at $1,226.2 billion, up from the November 2019 figure of $1,201.9 billion. December AUM reflects reinvested distributions and positive foreign-exchange impact of $12.9 billion and $4.0 billion, respectively.

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