Legg Mason today reported client assets of $681.6 billion as of Dec. 31, down 3% from the prior quarter and down 2.4% from the year before, while assets for Goldman Sachs increased nearly 3% for the quarter.
Legg Mason's net client outflows picked up during the latest quarter to $33 billion, from $8 billion for the three months ended Sept. 30, more than offsetting fourth-quarter market gains of $11.6 billion.
While well below the $77 billion the money manager lost during the year-earlier quarter, the latest outflows were in the same neighborhood as the $43 billion and $30 billion in outflows seen respectively for the first two quarters of the past year.
In a conference call, Mark R. Fetting, Legg Mason's chairman and CEO, said investors making asset allocation changes as the year ended apparently took advantage of the performance rebound enjoyed by key money management subsidiaries, such as Western Asset Management, to make changes.
Fixed-income strategies experienced the bulk of the group's latest net outflows, at $24 billion, with the remainder coming from money market strategies, $5 billion, and equity strategies, $4 billion.
Legg Mason executives, speaking on the conference call, noted that the bulk of investment strategies at key subsidiaries, including WAMCO and Legg Mason Capital Management, outperformed their benchmarks over the past year. While there's always a lag between a rebound in performance and investment flows, that performance pickup should help boost inflows over the coming quarters, they said.
Mr. Fetting said an industrywide move away from enhanced cash strategies over the past year contributed to WAMCO's outflows, with a long-expected loss of one $5 billion enhanced cash mandate occurring during the latest quarter. He didn't name the client. But with Western's enhanced cash strategy falling to $3 billion today from $20 billion at the end of 2008, that area should become less important as a future source of outflows, executives said.
For the latest quarter, net income came to $44.9 million, down 2% from the prior quarter. The firm suffered a $1.5 billion loss for the year-earlier quarter. Revenues, meanwhile, came to $690.5 million, up 4.6% from the prior quarter but down 4.1% from the year before.
Also today, Goldman Sachs' money management division reported client assets of $871 billion as of Dec. 31, up 2.7% from the prior quarter and up 12% from Nov. 30, 2008, before the company switched its fiscal year close to December.
In its earnings release for the latest quarter, Goldman Sachs reported net inflows of $12 billion and market appreciation of $11 billion.
Fixed-income strategies saw net inflows of $20 billion for the latest quarter, with equity strategies accounting for another $1 billion, and outflows of $8 billion in money market funds and $1 billion in alternatives.
Revenues from asset management operations for the latest quarter came to $1.125 billion, up 16% from the prior quarter and 19% higher than 13 months earlier.