Legg Mason CEO Joseph A. Sullivan said Tuesdaythat among institutional clients, the company is seeing a “continued migration away from the core and core-plus (bond) strategies that we traditionally built our business around.”
Institutional investors, rather, are showing significant interest in high-yield, bank loans and emerging markets local debt, Mr. Sullivan said, according to a transcript of his presentation at the Morgan Stanley Financials Conference in New York. As interest rates are expected to rise and spreads begin to tighten, clients are “looking for a little bit more high-alpha strategies,” Mr. Sullivan said.
Institutional assets represented 72% of the firm's assets under management as of March 31.
Mr. Sullivan, in his first sell-side conference appearance since he was named permanent CEO in February — stressed a key driver of the firm's growth is to offer relevant products in “high-demand categories,” according to the transcript.
Mr. Sullivan said the company's strategic five-year plan includes a focus on revenue growth through its equities and alternatives affiliates. He called the goals “ambitious” but “achievable.”
The firm's $2.61 billion in fiscal year 2013 revenue was broken down as follows: 41% equity, 41% fixed income, 12% alternative and 6% liquidity. Legg Mason has a March 31 fiscal year-end.
Last week, Chief Financial Officer Peter Nachtwey said at a different conference the firm is considering expanding its offerings into private equity, real estate and infrastructure.
Also Tuesday, the company reported assets under management of $654.3 billion at the end of May.