Invesco's December AUM Ups Slightly

Invesco Ltd. ( IVZ - Analyst Report ) recorded a marginal rise in its preliminary month-end assets under management (AUM) for December 2012. The AUM for the month was $687.7 billion compared with $683.8 billion at the end of November.

Favorable market returns as well as foreign exchange were the primary reasons for the rise. Foreign exchange led to a $0.6 billion hike in AUM. During the month, Invesco’s active and passive AUM witnessed flat long-term flows.

At the end of the month, Invesco’s average assets stood at $ 680.2 billion, while the total value of average active assets was $ 566.6 billion.

In the month under review, Invesco’s preliminary active AUM was recorded at $573.7 billion, reflecting a 0.8% rise from $569.0 billion in the prior month. However, preliminary passive AUM was $114.0 billion, down 0.7% from $114.8 billion in the earlier month.

At the end of December, Invesco’s total equity assets inched up 1.0% to $297.4 billion from $294.5 billion recorded at the end of November. Similarly, fixed income assets edged up 0.5% to $171.9 billion from $171.0 billion in the preceding month.

Invesco’s balanced assets summed up to $62.1 billion, rising 2.6% from the previous month. However, money market AUM came in at $73.3 billion in the reported month, declining 0.7% from the prior month’s level of $73.8 billion. Also, alternative AUM declined 1.2% from the prior month to $83.0 billion.

Among other asset managers, Franklin Resources Inc. ( BEN - Analyst Report ) declared preliminary AUM of $781.8 billion by its subsidiaries for December 2012. The company’s results rose 1.7% from $768.8 billion as of Nov 30, 2012. Moreover, it increased 16.6% from $670.3 billion as of Dec 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 is expected to announce its fourth quarter 2012 results on January 21, 2013. The earnings ESP (expected surprise prediction) – the percentage difference between the Most Accurate Estimate and the Zacks Consensus Estimate – for the company is negative 2.08%. This, along with its Zacks Rank #3 (Hold), indicates that the company is expected to miss the Zacks Consensus Estimate.

Presently, we maintain a long-term Neutral recommendation on Invesco.