Legg Mason reported a 7% increase in second quarter assets under management, while Janus said its assets jumped 14.5% for the same period.
Legg Mason reported $702.7 billion in assets under management as of Sept. 30, down 17% from the year before. Janus, meanwhile, had $151.8 billion in assets as of the same date, 5.4% less than a year earlier.
A news release announcing Legg Mason's earnings attributed the quarter-on-quarter gain to market appreciation of $53.9 billion, overwhelming net outflows of $8.1 billion for the three-month period.
Outflows were down sharply from the previous year — with a combined net loss of $171 billion in client assets over the prior four quarters — partially reflecting a solid rebound in performance by key Legg Mason asset management subsidiaries that had stumbled badly in 2007 and 2008, the release said.
In its earnings release, Legg Mason noted that eight out of nine mutual funds offered by Western Asset Management, the group's giant fixed-income manager, outperformed their benchmarks for the 12 months ended Sept. 30, and three out of four outperformed over the 10-year period.
For the latest quarter, net fixed-income outflows came to $10 billion, down from $22 billion for the previous quarter.
All six funds offered by Legg Mason Capital Management — the equity-focused subsidiary led by Bill Miller that suffered a spate of dramatic underperformance during the financial crisis — have been first-quartile performers year-to-date through Sept. 30. Equity outflows across all Legg Mason subsidiaries came to only $2 billion for the latest quarter, down from $6 billion for the prior quarter.
Money market strategies saw net inflows of $4 billion, the company said.
For the latest quarter, net income came to $45.8 million, down 8.6% from the prior quarter. The company reported a $108.7 million loss for the year-earlier period. A spokeswoman said the quarter-on-quarter decline in net income, despite higher assets under management, partly reflected a $22 million charge related to an exchange of debt into equity that was done in August.
Operating revenues, meanwhile, came to $659.9 million, up 7.6% from the prior quarter but down 32% from the year before.
At Janus, the increased assets are primarily a result of $20 billion in market appreciation that offset $600 million in long-term net outflows, according to a news release.
Janus Capital Management and Perkins Investment Management, both investment boutiques within Janus Capital Group, had long-term net inflows of $1.3 billion and $600 million, respectively. Long-term net outflows for INTECH, another Janus Capital Group investment boutique, totaled $2.5 billion.
The firm also reported third-quarter net income of $8.2 million, compared with $15.8 million in the previous quarter and $26 million a year earlier. Contributing to the income decline for the quarter were operating charges that included a $20.5 million legal settlement and $12.1 million severance package with former CEO Gary Black. This was partially offset by a realized non-operating gain of $5.8 million.
“During my tenure as interim CEO, I've become more confident than ever that the strength of our performance and the expansion of our distribution efforts position the firm for long-term success,” Timothy K. Armour, interim CEO, said in a news release. “Although the leadership team is mindful of the uncertain operating environment, we believe we've got strong momentum and are committed to building a top tier global firm in the intermediary and institutional channels.”
Revenue increased 13.7%, or $227.6 million, from the previous quarter, driven primarily by improving global markets.
