Invesco Ltd. (IVZ) has reported significant rise in its preliminary month-end assets under management (AUM) for the month of October 2011. The company’s AUM for the reported month grew 6.2% to $635.7 billion from $598.4 billion at the end of September 2011.
The rise in Invesco’s October AUM was mainly attributable to positive market returns and net inflows. Further, foreign exchange led to $4.3 billion hike in the AUM during the month under review.
Invesco’s preliminary AUM, excluding Exchange Traded Funds (ETFs), Unit Investment Trust (UIT) and passive funds, stood at $539.6 billion at the end of October 2011, up 5.6% from $511.0 billion in the prior month.
As of October 31, 2011, Invesco’s average assets stood at $618.2 billion, while the total value of average assets, excluding ETFs, UIT and passive funds, came at $526.4 billion.
At October end, Invesco’s total equity assets stood at $279.5 billion, up 10.4% from $253.2 billion, recorded in the preceding month. Similarly, the company’s total fixed income assets increased 1.2% to $148.5 billion from $146.7 billion as of September 2011.
During the month under review, Invesco’s balanced assets were $44.3 billion, up 6.7% from September 2011. Additionally, alternative AUM rose 6.8% to $89.1 billion during the reported month from $83.4 billion in the prior month.
Similarly, Invesco’s money market AUM stood at $74.3 billion (including $69.7 billion in institutional money market AUM and $4.6 billion in retail money market AUM) in October, improving 1.0% from $73.6 billion, recorded in September 2011.
Peer Performance
On October 8, Franklin Resources Inc. (BEN), one of Invesco's peers, reported its preliminary month-end AUM for October 2011. The company reported preliminary AUM of $694.1 billion for its subsidiaries, as of October 31, 2011, reflecting an increase of 5.2% from $659.9 billion as of September 30, 2011.
Our Viewpoint
Improving long-term investment performance, propelled by a gradual recovery in the global equity market, is likely to boost Invesco’s operating results over the mid to long term. Although the operating leverage is expected to improve significantly over the long term because of Invesco’s cost control initiatives, rising operating expenses will remain a near-term headwind to the company.
Though Invesco is poised to benefit from improved global investment flows resulting from its broad diversification, we remain concerned about increased redemptions and a volatile U.S. dollar.
Invesco currently retains a Zacks #4 Rank, which translates into a short-term Sell rating. However, considering the fundamentals, we are maintaining our long-term Neutral recommendation on the stock.
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