Baltimore-based Legg Mason Inc. LM reported a decline in its assets under management (AUM) as of Nov 30, 2015, as compared with the prior month. Preliminary month-end AUM came in at $691.4 billion, down around 1% from the prior month.
November’s AUM reflected fixed income inflows of $1.6 billion, $1.6 billion equity outflows and liquidity outflows of $3.3 billion. Negative foreign exchange impact of about $1.5 billion was an unfavorable factor.
Legg Mason’s equity AUM at the end of November declined 1% over the prior month to $193.7 billion. Moreover, fixed income AUM decreased around 1% from the previous month to $373.7 billion.
The fall in equity and fixed income AUM resulted in long-term AUM of $567.4 billion. The figure marked a 1% dip from the prior month. Moreover, liquid assets, which are convertible into cash, dipped 3% to $124 billion.
Competitive Landscape
Among other investment managers, Invesco Ltd.’s IVZ preliminary month-end AUM came in at $791.1 billion for November 2015. This reflects a slight decline over the prior month. Moreover, Franklin Resources Inc. BEN declared preliminary AUM of $790 billion by its subsidiaries for November 2015, exhibiting a 2% fall from $801.1 billion as of Oct 31, 2015.
Our Viewpoint
We believe that Legg Mason has the potential to outperform its peers in the long run, given its diversified product mix and leverage to the changing market demography. However, foreign exchange fluctuations remain a significant headwind. Moreover, absence of consistent growth in equity markets is a major concern.
Currently, Legg Mason carries a Zacks Rank #4 (Sell). A better-ranked asset manager is Woori Bank Co., Ltd. WF with a Zacks Rank #2 (Buy).
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