Invesco Ltd. (IVZ) reported a fall in its preliminary month-end assets under management (AUM) for Aug 2013. The AUM for the month was $719.7 billion, down 1.3% from $729.4 billion at the end of Jul 2013.
Unfavorable market returns, decrease in money market AUM and outflows in PowerShares QQQ were the primary reasons for the fall. However, foreign exchange led to a $1.5 billion increase in AUM. Further, long-term net flows were steady for the month.
In August, Invesco’s preliminary active AUM was $593.9 billion, down 1.2% from the prior month. Likewise, preliminary passive AUM fell 2.2% from Jun 2013 to $ $125.8 billion.
At the end of July, Invesco’s total equity AUM dropped 1.7% to $334.2 billion from $339.8 billion at the end of Jul 2013. Moreover, fixed income AUM dipped 1.4% from the prior month to $169.8 billion.
Invesco’s balanced AUM rose marginally to $51.7 billion in the reported month. The company’s money market AUM totaled $79.9 billion, sliding 1.1% from the previous month. Moreover, alternative AUM came in at $84.3 billion in the reported month, falling 1.1% from the prior-month level.
Notably, all the figures have been adjusted by excluding Atlantic Trust’s balanced and equity AUM of $21.7 billion and $0.5 billion, respectively. The latter is to be sold to Canadian Imperial Bank of Commerce (CM) for $210 million.
Among other investment managers, Franklin Resources Inc. (BEN) announced preliminary AUM of $817.3 billion by its subsidiaries for Aug 2013, down 2% from the prior month. Similarly, for Legg Mason Inc. (LM), preliminary AUM was $645 billion for Aug 2013, decreasing 1.8% from the previous month.
We expect operating leverage to improve significantly over the long term due to the company’s cost-control initiatives. Additionally, meaningful capital deployment activities continue to enhance shareholder value.
However, we are concerned about its high debt levels. Overall, Invesco is poised to benefit from improvement in global investment flows, given the company’s diversified footprint.
Currently, Invesco carries a Zacks Rank #3 (Hold).
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