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Legg Mason (LM) AUM Improves in May; Inflows Recorded

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Baltimore-based Legg Mason Inc. reported a rise in its assets under management (AUM) as of May 31, 2016, as compared with the prior month. Preliminary month-end AUM came in at $717.8 billion, up 1.5% from Apr 2016.

May’s AUM reflected fixed income inflows of $4.4 billion, $0.9 billion equity outflows, alternative outflows of $0.3 billion and liquidity inflows of $0.9 billion. However, negative foreign exchange impact of about $3.6 billion was an unfavorable factor.

Legg Mason’s equity AUM at the end of May increased slightly over the prior month to $162.9 billion. Moreover, fixed income AUM increased modestly from the previous month to $375.7 billion. Alternative assets including AUM managed by Clarion Partners, EnTrustPermal, RARE Infrastructure and Permal Capital Management surged 14.7% to $72.6 billion.

The rise in equity, fixed income and Alternative AUM resulted in long-term AUM of $611.2 billion. The figure marked a 1.6% increase from the prior month. Moreover, liquid assets, which are convertible into cash, inched up around 1% to $106.6 billion.

Competitive Landscape

Among other investment managers, Invesco Ltd. (IVZ - Free Report) announced its preliminary month-end AUM for May 2016 which came in at $791.1 billion, up 0.9% from $783.7 billion recorded in the prior month. However, Franklin Resources Inc. (BEN - Free Report) announced preliminary AUM by its subsidiaries of $737.3 billion for May 2016. The results exhibited around 1.3% decline from $747.1 billion as of Apr 30, 2016. Moreover, the figure decreased 17% from $888.4 billion as of May 31, 2015.

Our Viewpoint

Though foreign exchange fluctuations and absence of consistent growth in equity markets remain concerns, we believe that 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.

Currently, Legg Mason carries a Zacks Rank #3 (Hold). A better-ranked company in the finance industry is Enterprise Financial Services Corp. (EFSC - Free Report) with a Zacks Rank #2 (Buy).

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