BOSTON -- United Asset Management Corp. affiliates lost more business than they won in the second quarter.
Weak investment returns delivered the second whammy, and the company's total assets under management dropped to $210.1 billion as of June 30, from $213.9 billion as of March 31.
The Boston-based money manager holding company has been reporting billions of dollars in lost business since last year for a variety of reasons. But strong investment returns and assets gained through acquisition have buoyed total assets.
Not this time.
UAM reported $4.3 billion in negative net client cash flow, which indicates the balance of accounts lost and gained.
The company won't say how much new business it won in the quarter.
Investment gains on the company's $200 billion in assets under management were only $500 million in the second quarter, compared with investment gains of $19 billion in the first quarter.
The market during the second quarter didn't give anyone rewards, said Neil Epstein, an analyst at Putnam Lovell de Guardiola & Thornton, a New York investment bank.
UAM's affiliates have more than three-quarters of their assets in stocks -- 63% domestic equities and 14% international. With the Standard & Poor's 500 stock index up only 3.3% in the second quarter, and the Morgan Stanley Capital International Europe Australasia Far East index at only 1.1%, UAM was quite successful netting the $500 million that it did, Mr. Epstein said.
"UAM actually looks better than some of the other companies, due to that large and diversified pool of assets," Mr. Epstein said.
UAM Chief Executive Officer Norton Reamer acknowledged the net loss in assets was "unacceptably large."
There's "no one cause or factor, and no single answer," said UAM spokesman Jonathan Hubbard.
While poor performance could have led to lost accounts in some instances, weak client servicing and lack of strong marketing also played a part in the losses, he said.
"Many of our firms have preferred to spend their time on investing. We recognized these firms have to do a better job in these areas," Mr. Hubbard said.
UAM started a marketing and client servicing assistance program for its affiliates late last year.
He wouldn't say which UAM affiliates lost or won accounts.
Managers also may be losing accounts due to defined benefit plan portfolio rebalancing, he said.
Mr. Hubbard noted that 45% of UAM's assets are defined benefit, the retirement sector that isn't growing. Because defined benefit plans aren't as popular as defined contribution plans, he said, "we have to work harder to make up that net outflow."