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Money Management

MSIM assets under management up 1.1% in quarter, 9% for year

Morgan Stanley (MS) Investment Management had $474 billion in assets under management or supervision as of June 30, 1.1% higher than three months earlier and up 9% from the end of the second quarter 2017, according to parent Morgan Stanley's earnings statement released Wednesday.

Assets managed in equities were $114 billion as of June 30, up 4.6% from the previous quarter and up 21.3% from a year earlier. Fixed-income strategies totaled $69 billion, a decrease of 4.2% from the quarter ended March 31 but up 4.5% from the year prior. Alternative investments were up 0.8% to $132 billion in the second quarter compared to the previous quarter and up 9.1% from 12 months earlier. Liquidity assets were $159 billion as of June 30, up 1.3% over the prior quarter and up 3.2% from second quarter 2017.

MSIM reported second-quarter net inflows of $5 billion, vs. net outflows of $17.9 billion in the previous quarter and $2.5 billion a year earlier.

Equities attracted $3 billion of net inflows in the quarter ended June 30 compared to net inflow of $2.3 billion in the previous quarter and $400 million in second quarter 2017.

Fixed-income strategies suffered a second quarter of net outflows with $800 million in the quarter ended June 30 and $700 million in the first quarter 2018. By contrast, fixed-income attracted net flow of $2 billion in the second quarter 2017.

Alternative strategies had a leap in net inflows — $1.3 billion — compared to net outflows of $100 million in the previous quarter and $300 million in net inflows a year earlier.

Liquidity strategies brought in positive net inflow of $1.5 billion in the second quarter vs. net outflows of $19.4 billion in the first quarter of 2018 and net outflows of $200 million a year earlier.

James Gorman, Morgan Stanley's chairman and CEO, highlighted the news that MSIM produced six consecutive quarters of positive inflows in long-term assets (excluding liquidity assets), during the firm's earnings call Wednesday.

MSIM's long-term asset classes produced positive net inflows of $3.5 billion in the quarter ended June 30, $1.5 billion in the first quarter 2018 and $2.7 billion in second quarter 2018, according to the earnings report.

Jonathan M. Pruzan, Morgan Stanley's executive vice president and chief financial officer, added during the call that net inflows into the firm's active fundamental equity and multiasset strategies were particularly strong in the second quarter.

MSIM saw net revenue of $691 million in the most recent quarter, down 3.8% from the previous quarter and 3.9% higher than the year-earlier quarter. Net investment management income was $104 million in the latest quarter, down 18.1% compared to the quarter ended March 31 but up 4% from the second quarter a year earlier.

Parent Morgan Stanley had net revenue of $10.6 billion in the three months ended June 30, down 4.2% previous quarter and up 11.6% from the quarter ended June 30, 2017.

The firm's net income was $2.4 billion in the quarter ended June 30, down 8.7% from the prior quarter but up strongly — 38.7% — from the previous year.