Invesco's October AUM Inched Down

Invesco Ltd. ( IVZ - Analyst Report ) announced a 0.8% dip in its preliminary month-end assets under management (AUM) for the month of October 2012. The AUM for the month came in at $677.4 billion compared with $683.0 billion at the end of September.

Unfavorable market returns, negative foreign exchange and total net outflows, driven by $2.2 billion of outflow in the Invesco PowerShares QQQ, were the primary reasons for the decline in AUM. Moreover, foreign exchange led to a $1.1 billion drop in AUM. During the period, the company’s active AUM witnessed positive long-term net inflows.

In the month under review, Invesco’s preliminary active AUM was recorded at $563.4 billion, reflecting a 0.3% fall from $565.1 billion in the prior month. Likewise, preliminary passive AUM was $114.0 billion, down 3.3% from $117.9 billion in the last month.

As of October 31, 2012, Invesco’s average assets stood at $679.2 billion, while the total value of average active assets was $564.6 billion.

At the end of October, Invesco’s total equity assets slipped 2.8% to $292.3 billion from $300.6 billion recorded at the end of September. However, the company’s fixed income assets inched up 1.0% to $168.7 billion from $167.0 billion in the preceding month.

Invesco’s balanced assets summed up to $58.9 billion, rising 1.7% from the previous month. However, alternative AUM remained almost flat compared with the prior month at $84.2 billion.

Moreover, Invesco’s money market AUM came in at $73.3 billion in the reported month, almost at par with the prior month’s level of $73.2 billion.

Last week, Franklin Resources Inc. ( BEN - Analyst Report ) declared preliminary assets under management (AUM) of $753.9 billion by its subsidiaries for October 2012. The company’s results rose 0.5% from $749.9 billion as of September 30, 2012. Moreover, it increased 8.6% from $694.1 billion as of October 31, 2011.

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

Invesco currently retains a Zacks #3 Rank, which translates into a short-term Hold rating. Considering the fundamentals, we also maintain a long-term ‘Neutral’ recommendation on the stock.