Legg Mason on Wednesday reported $671.8 billion in assets under management as of Dec. 31, down 0.3% from the prior quarter and 1.4% lower than the year before.
For the latest quarter, net outflows of $16.7 billion outpaced market appreciation of $14.8 billion. Those overall outflows were up from $12.7 billion for the prior quarter but down from $32.7 billion for the year-earlier quarter.
By asset class, outflows totaled $12.9 billion from fixed-income strategies, $3.3 billion from equity strategies and $500 million from liquidity.
Still, with stock markets continuing to rally, equity assets under management by Legg Mason's money management subsidiaries jumped 8.6% to $184.2 billion, or 27% of overall AUM — up from roughly 25% for the prior quarter.
In a conference call Wednesday about Legg Mason's latest results, Mark R. Fetting, chairman and CEO, said the amount of overall AUM in higher-margin equity strategies is at its highest level since June 2008, which has contributed to lifting the group's advisory fee yield to 35 basis points from 32 basis points a year ago.
Investors have begun moving assets into riskier strategies, and the continuation of that trend this year should help Legg Mason further boost its profitability, Mr. Fetting noted. In fixed income, where bond giant Western Asset Management accounts for more than half of Legg Mason's AUM, the same move to higher-margin “specialized” products from core and core-plus strategies should likewise be positive, he said.
For the latest quarter, Legg reported net income of $61.6 million, down 18% from the prior quarter but up 37% from the year before. On the conference call, Legg executives said restructuring expenses as well as costs related to a closed-end fund launch contributed to the drop in net income from the prior quarter.
Total operating revenues, meanwhile, came to $721.9 million, up 7% from the prior quarter and up 4.5% from the year before.
