Invesco's June AUM Improves

On Wednesday, Invesco Ltd. (IVZ - Analyst Report) announced a 2.3% rise in its preliminary month-end assets under management (AUM) for the month of June. The company’s AUM for the reported month was $646.6 billion compared with $632.1 billion at the end of May 2012.

The increase in Invesco’s AUM was a result of encouraging market returns, long-term net inflows and favorable foreign exchange worth $2.3 billion. However, the active net long-term flows remained unchanged.

In the month under review, Invesco’s preliminary Active AUM was recorded at $539.0 billion, reflecting approximately a 2.0% hike from $528.6 billion in the prior month. Likewise, preliminary Passive AUM was $107.6 billion, up 4.0% compared with $103.5 billion in the prior month.

As of June 30, 2012, Invesco’s average assets stood at $651.2 billion, while the total value of average active assets came in at $542.9 billion.

At June-end, Invesco’s total equity assets grew 3.7% to $283.8 billion from $273.7 billion recorded in the last month. Similarly, the company’s fixed income assets improved 1.2% to $155.6 billion from $153.7 billion in May.

Invesco’s balanced assets summed up to $51.5 billion, growing 4.3% from the previous month. Further, alternative AUM inched up 0.8% to $84.7 billion from $84.0 billion, recorded in the prior month.

Moreover, Invesco’s money market AUM came in at $71.0 billion (including $67.0 billion in institutional money market AUM and $4.0 billion in retail money market AUM) in the reported month, marginally sliding 0.4% from $71.3 billion, recorded in May 2012.

Peer Performance

Earlier this week, Franklin Resources Inc. (BEN - Analyst Report) declared its preliminary month-end AUM for June 2012. The company reported preliminary AUM of $706.9 billion for its subsidiaries, as of June 31, 2012, reflecting a rise of 3.4% from $683.5 billion as of May 31, 2012.

Our Take

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. Moreover, the operating leverage is anticipated to improve substantially over the long term due to the company’s cost-control initiatives.

Invesco currently retains a Zacks #5 Rank, which translates into a short-term Strong Sell rating. Considering the fundamentals, we also maintain a long-term ‘Underperform’ recommendation on the stock.