Meanwhile, exchange-traded funds experienced net outflows in the second quarter of $124 million, after seeing $58 million in net outflows in the first quarter and $200 million in net inflows in the year-earlier quarter. Separate accounts and other vehicles had $4.7 billion in net inflows during the three months ended June 30, vs. $540 million in net outflows during first quarter and $149 million in net outflows during the second quarter of 2018.
Victory Capital's revenue was $91.4 million in the second quarter, up 4.5% from March 31 and down 12.5% over June 30, 2018. Net income was $14.4 million, about flat over the prior quarter and down 23% from the year-earlier quarter.
Compared to the quarter ended June 30, 2018, revenue was negatively impacted by lower average AUM and a lower reported average fee rate, related to a change in business mix and the company adopting ASU 2014-09 this year, a revenue accounting standard from the Financial Accounting Standards Board, the earnings release said.
Additionally, the lower operating margin compared to the second quarter of 2018 was attributed to higher acquisition-related costs and higher restructuring and integration costs in 2019.
On Monday, the firm also announced the initiation of a quarterly cash dividend for shareholders.
"The decision by our board of directors to initiate a dividend exemplifies the confidence we have in the strength and durability of our business and underscores our commitment to enhancing shareholder value," Victory Capital Chairman and CEO David Brown said in a statement.
"The addition of a cash dividend adds another component to our capital allocation strategy while maintaining a primary focus on creating the capital flexibility needed to participate in the consolidation of our industry," he said.
Separately, the company's AUM grew to $147.8 billion as of July 31, after it completed its acquisition of USAA Asset Management at the start of last month.
"The completion of the USAA Asset Management Co. acquisition marks a significant milestone for Victory Capital. It significantly broadens our investment capabilities, increases our size and scale and expands our distribution platform with the introduction of a new direct channel focused on USAA members," Mr. Brown said in the earnings release statement.
"Our integration efforts are progressing well, and we remain on target to achieve total annual cost synergy estimates of $120 million. This includes $75 million of synergies that were realized as of July 1, 2019, an additional $25 million expected to be realized by year-end, and the balance in 2020," he added.
