Legg Mason Inc.
) reported a dip in its assets under management (AUM) as of May
31, 2013, compared with the prior month, reflecting a reduction
in foreign exchange AUM. Preliminary month-end AUM came in at
$654.3 billion, down 0.2% from April-end. Equity and liquidity
AUM were up in the month under review, though Fixed Income AUM
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Legg Mason's equity AUM as of May-end rose 2.1% from the prior
month to $166.2 billion, while fixed income AUM decreased 2.3%
compared with the prior month to $362.8 billion.
The fall in fixed income AUM, partially offset by increased
equity AUM resulted in a long-term AUM of $529.0 billion,
reflecting a 1.0% decrease against the prior month. Liquid
assets, which are convertible into cash, surged about 3.3% to
Among other investment managers,
) announced a 0.4% rise in its preliminary month-end AUM for May
2013, which stood at $751.8 billion. Another firm -
Franklin Resources Inc.
) - declared preliminary AUM of $847.5 billion by its
subsidiaries for the month of May 2013, reflecting a marginal dip
of 0.1% over the prior month.
We believe 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. Moreover, a significant
rebound in equity markets in the coming quarters would act as a
However, in the near term, asset outflows will remain a
significant headwind. Yet, owing to the restructuring initiatives
and cost-cutting measures, we expect operating efficiencies to
improve for Legg Mason and dividend payments to continue to
inspire investors' confidence in the stock.
Currently, Legg Mason holds a Zacks Rank #3 (Hold). Some better
performing asset managers include
Virtus Investment Partners, Inc.
) with a Zacks Rank #1 (Strong Buy).