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Legg Mason's (LM) AUM Climbs in September, Outflows Increase

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Baltimore-based Legg Mason Inc. reported a marginal rise in assets under management (AUM), as of Sep 30, 2017, compared with the prior month. Preliminary month-end AUM came in at $754.4 billion, slightly up from August 2017.

September’s AUM displayed $0.3 billion fixed income outflows, alternative inflows of $0.2 billion, equity outflows of $1.2 billion and liquidity inflows of $0.9 billion. Notably, negative foreign exchange impact of $0.7 billion was also an unfavorable factor.

Legg Mason’s equity AUM at the end of September 2017 moved up around 19.5% from the prior-year figure to $201.2 billion. Further, fixed income AUM inched up 3.8% from the previous year to $411.9 billion. However, Alternative assets edged down moderately to $65.8 billion.

Rise in fixed income and equity AUM, partially offset by lower Alternative AUM, resulted in long-term AUM of $678.9 billion. The figure marked growth of 6.5% from the previous year. Additionally, liquid assets, which are convertible into cash, declined 21% to $75.5 billion from the prior-year quarter figure.

Competitive Landscape

Among other investment managers, Franklin Resources Inc. (BEN - Free Report) announced preliminary AUM by its subsidiaries of $753.2 billion for September 2017. Results displayed around 1% rise from $747.4 billion recorded as of Aug 31, 2017. Further, the figure jumped around 2.7% from the year-ago quarter.

Invesco Ltd. (IVZ - Free Report) announced an increase in its preliminary month-end AUM for September 2017. The company’s AUM came in at $917.5 billion, a rise of 1.2% from $906.7 billion in the previous month. The rise reflected favorable market returns, an increase in Money Market AUM and net long-term inflows, partially offset by outflows in PowerShares QQQs. Moreover, FX increased September AUM by $3.5 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. However, absence of consistent growth in alternative AUM and negative foreign exchange fluctuations remain headwinds.

Shares of the company have gained 29.7% so far, this year, outperforming 26% growth recorded by the industry it belongs to.

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.

Among others, Ameriprise Financial, Inc. (AMP - Free Report) , carrying a Zacks Rank #2 (Buy), is worth considering, with the estimates witnessing upward revisions over the last 30 days.

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