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Money Management

Victory Capital assets climb 10.2% in quarter, decline over year

Victory Capital Holdings on Tuesday reported $58.1 billion in assets under management as of March 31, up 10.2% from three months earlier but down 4.5% from a year earlier.

Mutual fund assets totaled $33.8 billion as of March 31, up 10.8% from Dec. 31 but down 8.7% from March 31, 2018. Exchange-traded fund assets totaled $3.1 billion, a 5.6% increase from three months earlier and up 16.8% from a year earlier.

AUM in separate accounts and other vehicles was $21.2 billion as of March 31, up 9.8% from Dec. 31 and relatively flat compared with March 31, 2018.

Across all investment vehicles, Victory Capital experienced $1.1 billion in net outflows, vs. net outflows of $1 billion in the previous quarter and net outflows of $633 million in the first quarter of 2018.

Victory Capital's AUM increased over the first quarter due to market appreciation of $6.5 billion, partially offset by the net outflows, a company earnings release said.

Separately, the company is on track to complete its acquisition of USAA Asset Management Co. by July 1 and "plans to integrate the USAA business are progressing well," Victory Capital Chairman and CEO David C. Brown said in a statement in the earnings release.

"Additionally, we have increased our cost synergy estimates from $100 million to $110 million," Mr. Brown added. "We now expect $60 million of synergies to be in place at close, $95 million within six months of close, and the full $110 million within 12 to 15 months of close," which is a faster pace than the company had previously said.

USAA Asset Management's AUM as of March 31 was $80 billion.

The acquisition of USAA "will truly transform our business," Mr. Brown added. "It will meaningfully diversify our AUM and investment capabilities, while further enhancing economies of scale. It will also significantly expand our distribution platform to include a direct channel to serve USAA members."

Victory Capital also said last month that it was nixing its plans to acquire New York-based derivative asset management specialist Harvest Volatility Management for $300 million. Victory Capital announced the deal in September, but in an April 22 news release said both companies "mutually agreed to terminate their previously announced agreement," due to "recent adverse market conditions affecting Harvest." The deal with Harvest, which had $12 billion in assets under management, would have boosted Victory Capital's firmwide AUM to about $75 billion, Pensions & Investments reported in September.

Regarding its first-quarter earnings, Victory Capital's mutual funds saw net outflows of $508 million, compared with $1.5 billion in net outflows in the previous quarter and $640 million in net outflows in the year-earlier quarter.

Net outflows from ETF products were $58 million vs. $121 million in net inflows in the fourth quarter and $452 million in net inflows in the first quarter of 2018. Separate accounts and other vehicles saw $540 million in net outflows compared with $367 million in net inflows in the previous quarter and $445 million in net outflows in the year-earlier quarter.

Victory Capital's revenue was $87.5 million in the first quarter, compared with $96 million in the fourth quarter and $105 million in the first quarter of 2018.

Net income was $14.5 million vs. $13.9 million in the previous quarter and $10.5 million in the year-earlier quarter.