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Legg Mason Records November AUM Growth on Liquidity Inflows

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Legg Mason (LM - Free Report) reported 1.2% growth in assets under management (AUM) as of Nov 30, 2018, from the prior month. Preliminary month-end AUM came in at $741.6 billion, up from the October 2018 figure of $733 billion.

November AUM displayed $1.7-billion net fixed income outflows, equity net outflows of $0.6 billion and alternative net outflows of $0.2 billion, fully offset by $6 billion of liquidity inflows. Notably, positive foreign exchange impact of $0.2 billion was another favorable factor.

Legg Mason’s equity AUM at the end of November inched up 1.7% from the prior month to $200.3 billion. Fixed income AUM dipped slightly sequentially to $405.9 billion. Further, alternative assets decreased moderately to $66.5 billion.

Fall in fixed income and alternatives AUM was partly offset by rise in equity AUM, resulting in long-term AUM of $672.7 billion. The figure marks a marginal rise from the previous month. Moreover, liquid assets, which are convertible into cash, moved up 9.5% to $68.9 billion.

Competitive Landscape

Franklin Resources (BEN - Free Report) has announced preliminary AUM by its subsidiaries of $683.3 billion for November 2018. Results display marginal rise from $682.7 billion recorded as of Oct 31, 2018. Net market gains, partially offset by net outflows led to the increase. However, the figure dipped 9.3% from the previous year.

T. Rowe Price Group (TROW - Free Report) announced preliminary AUM of $1.03 trillion for November 2018. Results reflect nearly 2% rise from $1.01 trillion recorded on Oct 31, 2018. Client transfers from mutual funds to other portfolios, including trusts and separate accounts, were $0.6 billion in November.

Invesco (IVZ - Free Report) announced preliminary AUM of $926 billion for November 2018, down less than 0.1% from the prior month. Net long-term outflows and non-management fee earning AUM outflows were the primary reasons behind the decline in total AUM.

Our Viewpoint

Legg Mason has the potential to outperform its peers over the long run on the back of its diversified product mix and leverage to the changing market demography. Nonetheless, erratic equity markets and foreign-exchange fluctuations remain headwinds.

Shares of the company have lost around 14% over the past three months compared with 18.5% decline recorded by the industry.

Legg Mason currently carries a Zacks Rank #4 (Sell).

You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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