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Money Management

Legg Mason’s AUM falls 1.7% in quarter despite long-term net inflows

Legg Mason (LM) on Wednesday reported $754.1 billion in assets under management as of March 31, down 1.7% from the end of the previous quarter but up 3.5% from a year earlier.

The company in its first-quarter earnings statement said it had $1.2 billion in long-term net inflows for the latest quarter vs. net inflows of $2.2 billion in the previous quarter and net inflows of $3.9 billion in the first quarter of 2017.

Fixed-income net inflows were $2.8 billion in the quarter, down from net inflows of $5.4 billion in the previous quarter but still more than offset equity net outflows of $2.1 billion; in the fourth quarter, equities saw $3.2 billion in net outflows. Alternatives had net inflows of $500 million vs. no net flows in the fourth quarter.

Overall, the company reported $9.5 billion in net outflows for the latest quarter, vs. $100 million in net outflows last quarter and net inflows of $800 million in the year-earlier quarter. The quarterly outflows were chiefly because of liquidity net outflows that totaled $10.7 billion, compared to $2.3 billion in net liquidity outflows in the fourth quarter and $3.1 billion in net outflows in the year-earlier quarter.

As of March 31, fixed income represented 56% of AUM, up from 55% three months earlier, while equity represented 27% and alternatives, 9%, both unchanged from the previous quarter. Cash was 8% of AUM, down from 9%.

First-quarter revenue was $785 million, down 1% from the last quarter of 2017 but up 8.6% from the same quarter a year earlier. However, net income of $76.3 million compared to $149.2 million for the quarter ended Dec. 31 and $75.9 million for the first quarter 2017.

Joseph A. Sullivan, Legg Mason chairman and CEO, said in the earnings release that the first-quarter operating results were the result of "solid investment performance, a higher operating revenue yield, expense management and long-term inflows," along with better-than-expected performance fee revenue.