Legg Mason Inc., Baltimore, reported assets under management of $854.7 billion as of June 30, down 1.5% from the first quarter but up 114% from the year before, reflecting the addition of $420.6 billion from the December acquisition of Citigroup Asset Management.
The latest quarter was "one of the more challenging we've seen," Raymond A. "Chip" Mason said at a news conference July 25. The quarterly decline was only the second time in the past 60 quarters that assets under management declined, Mr. Mason said.
Equity assets tumbled $13.4 billion from March, partially offset by a $10.1 billion gain for Legg Mason's fixed-income unit, Western Asset Management. For the quarter, Legg Mason saw net client outflows of $6.5 billion and market depreciation of $6.4 billion. Money market funds accounted for much of the net outflows, dropping by $9.6 billion. Net income was $156 million for the latest quarter, up 4% from the prior quarter and up 38% from a year earlier. Operating revenue, meanwhile, came to $1.04 billion, down 1.3% from the previous quarter but up 137% from the year before.
Jim Hirschmann, Legg president and COO, said demand for WAMCO's fixed-income strategies remains strong, with $7 billion in mandates "booked but not funded yet."
Mr. Mason said one way the group's numbers could improve would be for "equity markets to perform better."
Separately, Barclays Global Investors, San Francisco, had $1.6 trillion in assets under management as of June 30, up 7% from Dec. 31 and up 14% from the previous year, according to a news release. The increase in the first half of 2006 included $30 billion in net new assets. BGI's active and iShares businesses increased assets during the first half of the year, while its managed index business fell. Assets in BGI's active business increased 0.5% to $376 billion as of June 30, from $374 billion six months earlier. Managed cash and other assets totaled $202 billion as of June 30, up 10% from $183 billion on Dec. 31. Indexed assets were $1 trillion as of June 30, down 2.5% from $1.1 billion at the end of December. BGI's iShares ETF unit had $234 billion in assets as of June 30, up 10% from $213 billion at the end of 2005. Overall net fee and commission income was $1.6 billion as of June 30, up 47% from the year before, the result of increased management and incentive fees, particularly in the iShares and active business, according to the release.
Other money managers also released their asset under management figures for the second quarter.
• AllianceBernstein Holding LP, New York, reported assets under management of $625 billion, a 1.1% increase from the first quarter and 21.2% higher than a year earlier, the company announced. AllianceBernstein attributed the growth to both equity market appreciation and net inflows. Net inflows totaled $16.9 billion for the quarter, with $9.7 billion from institutions, $4.7 billion from retail and $2.5 billion from private clients.
• Franklin Resources Inc. subsidiaries reported a combined $490.1 billion in assets under management for the quarter ended June 30, essentially flat compared with the previous quarter's $491.6 billion but up 15% from a year earlier, according to a news release from the San Mateo, Calif., company. The units managed 60% of the money in equities as of June 30, up three percentage points from last year; 22% in fixed income, down two percentage points from 2005; and 17% in hybrid assets, unchanged from last year. Inflows exceeded outflows by $1.3 billion for the quarter ended June 30, compared with $2.5 billion the prior quarter and $7.7 billion a year ago, the news release said.
• AMVESCAP PLC, London, reported $413.8 billion in assets under management, up 0.7% from the previous quarter and 10.9% higher than the year before, according to CEO Martin Flanagan. The company reported net inflows for the quarter of $2.9 billion, as demand in Europe, Asia and the U.K. for the firm's institutional fixed-income and alternatives strategies more than offset outflows in the U.S. and Canada. Before market declines and foreign exchange fluctuations were taken into account, AMVESCAP's net long-term inflows in Europe, Asia and the U.K. came to a combined $4.8 billion, while outflows in the U.S. and Canada came to $2.5 billion. While AMVESCAP continued to see net outflows from its equity offerings, which account for 44% of overall assets under management, Mr. Flanagan said in a conference call that he was confident that the quiet progress in improving performance being made by AIM, AMVESCAP's U.S. mutual fund arm, will pay off when market sentiment toward sectors such as growth equity improves. Net income for the quarter came to $117 million, up 8.8% from the first quarter and up 65% from the year before. Net revenue came to $588 million, up 0.7% from the prior quarter and up 7.1% from the year before.
• T. Rowe Price Group Inc., Baltimore, reported record assets under management of $293.7 billion, up 0.3% from the previous quarter and up 9% from the year before. Second-quarter net inflows of $7.7 billion outpaced market declines of $6.9 billion. The firm's institutional strategies had a total of $110.5 billion in assets, spurred by net inflows of $5.1 billion for the quarter, exceeding market-related declines of $2.3 billion, for a $2.8 billion gain. T. Rowe Price's U.S. mutual fund assets declined by $2 billion to $183.2 billion, with net inflows of $2.6 billion and $4.6 billion in market declines. Net income for the quarter came to a record $136 million, up 17% from the previous quarter and an increase of 32% from the year before. Revenue also posted a new record of $446 million, up 4% from the prior quarter and up 23% from the year before.
• Federated Investors Inc., Pittsburgh, reported $210.5 billion in assets under management in the second quarter, a 3.2% decrease from March 31, spurred by a 3.2% decline in money market assets, according to a company regulatory filing. Federated's assets were up 2.9% from a year earlier. Federated reported $236.4 million in revenue, a 1% decrease from the first quarter and a 9% increase from the second quarter 2005. The increase over the last year was attributed to the company's acquisition of Alliance Capital Management's cash management business, as well as an increase in equity assets under management.
• Principal Financial Group Inc., Des Moines, Iowa, reported $206 billion in assets under management for the second quarter, an increase of less than 1% from the previous quarter but a 14% boost over the previous one-year period, according to a company news release. Net flows into the company's Principal Global Investors and Principal International businesses were partially offset by depreciation in the equity markets during the quarter. The company cited its international and third-party institutional business as reasons for the growth over the last year, as well as an increase in its domestic asset accumulation businesses. For the quarter, Principal also reported net income available to stockholders of $210.5 million, a 26% decrease from the first quarter and a 12% decrease from the second quarter 2005.
• Affiliated Managers Group Inc., Prides Crossing, Mass., reported $202.3 billion in assets under management as of June 30, down 0.3% from the prior quarter but up 47% from the year before. For the quarter, market-related declines of $3.5 billion more than offset net client inflows of $2.9 billion. Institutions accounted for $2.2 billion of total inflows, followed by $404 million from high-net-worth investors and $289 million into mutual funds. In a news release, AMG said organic growth accounted for roughly $40 billion of the $64 billion jump in assets under management from the year before. The acquisition in July 2005 of six Canadian asset management firms with just less than $25 billion in assets under management accounted for the remainder. AMG reported second-quarter net income of $33.9 million, down 3.7% from the previous quarter but up 29% from the year before. Revenue for the latest quarter came to $283.1 billion, up 1.8% from the prior quarter and up 36% from the year before.
• Putnam Investments reported $180 billion in assets under management at the end of the second quarter, a 4.8% decrease from the previous quarter, according to a regulatory filing by the investment manager's parent company, Marsh & McLennan Cos. Inc. Putnam's institutional assets dropped by 3.2% to $61 billion during the quarter, and mutual fund assets declined by 5.6% to $119 billion. Roughly $4 billion of the decrease came from a decline in growth-oriented mutual funds, which dropped 13% to $27 billion during the quarter. For the year, Putnam's assets under management declined 7.7%, with mutual fund assets slipping 9.8% and institutional assets dropping by 3.2%. Overall, Putnam's revenue were $339 million in the second quarter, a 10% decrease from the previous quarter.
• Janus Capital Group Inc., Denver, reported $153.4 billion in assets under management, down 3% from the previous quarter and up nearly 18% from last year, according to a news release. The decline in assets in the second quarter — which included figures from Janus' INTECH subsidiary — reflect long-term net outflows of $400 million, money market net inflows of $1.2 billion and $5.5 billion in market depreciation and fund performance. INTECH reported $51.5 billion in assets, up 2% from the previous quarter and up 62% from last year. INTECH had net inflows of $2.6 billion in the second quarter. Excluding INTECH, Janus' long-term net outflows totaled $3 billion in the second quarter, compared with $500 million the previous quarter. Approximately $1.2 billion of Janus' net outflows during the second quarter came from small-cap value products, the news release said.
Additionally, Janus will take an $8 million charge in the third or fourth quarter after losing a $2.4 billion subadvisory account from AEGON, confirmed Shelley Peterson, Janus spokeswoman.
AEGON decided to replace Janus, which managed the TA IDEX Janus Growth Fund, "to improve performance and economies of scale," said Cindy Nodorft, AEGON spokeswoman. Transamerica Investment Management, an AEGON subsidiary, will assume management of the fund in November subject to shareholder approval, Ms. Nodorft said.
• Lazard Ltd., New York, reported $93.9 billion in assets under management, down 1.3% from the first quarter, according to a company filing with the SEC. The company reported a net outflow of $1.6 billion during the quarter, according to the filing. For the year, Lazard's assets under management increased roughly 13%, attributed to market appreciation and inflows into global and regional strategies. Overall, Lazard reported asset management revenue of $129.8 million for the quarter, up 19% from the previous quarter. The company also reported management fees of $112.2 million for the three months ended June 30, a record for a single quarter.
• The Phoenix Cos. Inc., Hartford, Conn., reported $43.3 billion in assets under management, up 16.7% from the first quarter and 2.4% above the previous year, according to a company regulatory filing. The company attributed the annual increase to improved performance in the majority of its assets, but added it also experienced lower retail and institutional inflows than during the same quarter last year.
• Cohen & Steers Inc., New York, reported $23.2 billion in assets under management, a 1.2% increase over the first quarter and a 17% gain from year-ago assets, according to an SEC filing. Quarterly assets increased as a result of $536 million in net inflows, led by its global and international real estate securities strategies. Houlihan Rovers, Cohen & Steers' Brussels-based affiliate, also increased its assets by $900 million during the quarter, which wasn't reflected in the net inflows.
