Legg Mason hit by outflows

City A.M. Reporter
LEGG Mason said outflows from its funds sharply accelerated in the latest quarter.

One of the US’ largest money managers, Legg Mason said outflows totaled $33bn (£20.4bn) in its fiscal third quarter ended 31 December, compared with $8bn in the second quarter.

Assets under management were $681.6bn at 31 December, down three per cent from the end of September. Though many funds performed well, Legg Mason said customers pulled money out of stock and liquidity funds and bond funds. Bond funds lost $24bn.

Chief executive Mark Fetting said on a conference call with analysts that “recovery to inflows is taking a bit longer” than expected but that improved investment performance would attract new money soon.

“Basically, it’s a classic case of the outflows continuing, then the sales really fell off. The sales have come back but not enough to offset redemptions,” Fetting said.

Legg Mason put activist investor Nelson Peltz on its board last October. He is now the single largest investor in the company, and it is unclear what changes he might seek.

Despite the outflows, Legg Mason reported third-quarter net income of $44.9m compared with a $1.5bn loss in the third quarter a year ago. Sequentially, third-quarter income was down compared with $45.8m in the second quarter.

The company, which is based in Baltimore, said revenue was $690.5m compared with $720m in the same quarter a year ago. Analysts, on average, had been expecting revenue of $682m.

Shares of the asset manager fell 7.9 per cent, to $28.95.