Victory Capital AUM down 18.5% for quarter, up 113% for year

Victory Capital Holdings on Monday reported $123.8 billion in assets under management as of March 31, down 18.5% from three months earlier but up 113% from a year earlier.

Victory Capital had total net outflows of $2.9 billion during the first quarter compared with $1.4 billion in net outflows in the fourth quarter and $1.1 billion in net outflows in the year-earlier quarter.

The firm's AUM declined more than 18% in the first quarter primarily due to more than $25 billion in "negative market action," said David C. Brown, chairman and CEO, during the quarterly earnings call Monday.

The 113% year-over-year increase in AUM reflects Victory's acquisition of USAA Asset Management, which closed July 1, Mr. Brown added.

Victory Capital's revenue was $204 million in the first quarter, down 6.5% from the previous quarter and up 134% from the first quarter of 2019.

The revenue decline over the quarter was primarily due to the lower average AUM and a slightly lower average fee rate realization as a result of a shift in AUM mix, said Michael D. Policarpo, president, chief financial officer and chief administrative officer, during the call.

The 134% increase in revenue was primarily due to higher average AUM as a result of the USAA acquisition, an earnings release said.

Regarding the impact of the COVID-19 pandemic, Mr. Brown said in a statement in the earnings release that: "Advance preparation proved essential for delivering uninterrupted service to clients and providing safe working conditions for employees. Our comprehensive and thoroughly tested business continuity plan has ensured that all investment activities remain unaffected, and we have been energized by our organization's ability to seamlessly adapt to challenging circumstances."

Mr. Brown separately said during the earnings call that when stability in the market environment returns, "the opportunity for acquisitions is going to be enormous for firms like ours."

"I'm somewhat optimistic that this is the beginning of the stabilization, but I really don't know how long (it will take), but we're patient and we're preparing ourselves and from my viewpoint, I think we're going to have some tremendous opportunities," Mr. Brown said.