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Money Management

Morgan Stanley Investment Management AUM drops 2.7% on fall in liquidity assets

Revenue and net income rise at the money management unit

Morgan Stanley (MS) Investment Management had $469 billion in assets under management as of March 31, 2.7% lower than three months earlier but up 11.4% from the end of the first quarter of 2017, according to parent Morgan Stanley's earnings statement released Wednesday.

The overall quarterly AUM decline was generally attributed to an asset drop in MSIM's liquidity strategies, to $157 billion in assets at the end of the first quarter, down 11% from Dec. 31 but up 3% from the year-earlier quarter. That quarterly decline was the result of investors managing their cash balance needs following the end of the year, Jonathan M. Pruzan, executive vice president and chief financial officer, said in an earnings call.

Alternatives had $131 billion as of March 31, up 2% from three months earlier and up 10% from a year earlier. Equity strategies had $109 billion, up 4% compared to the end of the fourth quarter and up 25% from the quarter ended March 31, 2017. Fixed income had $72 billion, down 1% from Dec. 31 but up 16% from 12 months earlier.

MSIM reported first-quarter net outflows of $17.9 billion, vs. net inflows of $23.9 billion in the fourth quarter and net outflows of $8.2 billion in the first quarter of 2017. By investment style, net outflows of $19.4 billion came from liquidity strategies, $700 million from fixed income and $100 million from alternatives. Equities saw net inflows of $2.3 billion.

MSIM saw net revenue of $718 million in the first quarter, up 13% from the previous quarter and 18% higher than the year-earlier quarter. Net investment management income was $127 million in the latest quarter vs. a net loss of $35 million for the prior quarter and net income of $67 million in the first quarter 2017.

Parent Morgan Stanley had net revenues of $11.08 billion in the three months ended March 31, up 17% from the fourth quarter of 2017 and up 14% from the previous first quarter. Net income was $2.67 billion compared to $643 million in the fourth quarter and $1.93 billion for the first three months of 2017.