Invesco Ltd. ( IVZ - Analyst Report ) announced a 5.4% fall in its preliminary month-end assets under management (AUM) for the month of May. The company’s AUM for the reported month was $632.1 billion compared with $668.4 billion at the end of April 2012.

Invesco’s AUM declined as a result of market depreciation, long-term net outflows and unfavorable foreign exchange worth $7.1 billion. Total long-term outflows were largely driven by Passive outflows from the PowerShares DB and PowerShares QQQ products, as well as a stable value client termination reported in Active fixed income.

Invesco’s preliminary Active AUM totaled $528.6 billion at the end of May, reflecting 5.5% decline from $559.1 billion in the prior month. Likewise, in the month under review, preliminary Passive AUM was $103.5 billion, down 5.3% compared with $109.1 billion in April.

As of May 31, 2012, Invesco’s average assets stood at $658.0 billion, while the total value of average active assets came in at $549.5 billion.

At May-end, Invesco’s total equity assets declined 8.7% to $273.7 billion from $299.8 billion in April. Similarly, the company’s fixed income assets also dipped 1.2% to $153.7 billion from $155.5 billion in April.

Invesco’s balanced assets summed up to $49.4 billion, decreasing 3.9% from the previous month. Further, alternative AUM also fell 4.2% to $84.0 billion from $87.7 billion recorded in the prior month.

Likewise, Invesco’s money market AUM arrived at $71.3 billion (including $67.2 billion in institutional money market AUM and $4.1 billion in retail money market AUM) in the reported month, going down 3.6% from $74.0 billion, recorded in April 2012.

Peer Performance

Concurrently, Franklin Resources Inc. ( BEN - Analyst Report ) declared its preliminary month-end AUM for May 2012. The company reported preliminary AUM of $683.5 billion for its subsidiaries, as of May 31, 2012, a dip of 5.9% from $726.4 billion as of April 30, 2012.

Our Take

Long-term investment performance of Invesco has been improving, owing to the recovering global equity market, which is further expected to boost the company’s operating results. Moreover, the operating leverage is anticipated to improve substantially over the long term due to the company’s cost control initiatives.

Invesco’s broad diversification comfortably positions it to benefit from enhanced global investment flows. However, the volatile U.S. dollar, unstable equity markets and mounting competition make us apprehensive.

Invesco currently retains a Zacks #3 Rank, which translates into a short-term Hold rating.