Thursday, May 1, 2014
Invesco's June AUM Declines - Analyst Blog
Unfavorable market returns, reduction in money market AUM and negative long-term flows were the primary reasons for the drop. Additionally, foreign exchange led to a $0.2 billion decline in AUM. At the end of second-quarter 2013, Invesco's average assets were $719.8 billion while the total value of average active assets was $593.9 billion.
In June, Invesco's preliminary active AUM was $581.9 billion, down 3.1% from the prior month. Further, preliminary passive AUM was $123.7 billion, down 4.3% from the prior-month level.
At the end of June, Invesco's total equity AUM fell 1.3% to $321.4 billion from $330.7 billion recorded at the end of May 2013. Moreover, fixed income AUM decreased 2.8% from the prior month to $173.1 billion.
Moreover, Invesco's balanced AUM fell 3.9% to $49.7 billion. Its money market AUM totaled $77.8 billion, falling 5.9% from the previous month. However, alternative AUM came in at $83.6 billion in the reported month, falling 3.4% from the prior-month level.
Notably, all the figures have been adjusted by excluding Atlantic Trust's balanced and equity AUM of $21.2 billion and $0.5 billion, respectively. The latter is to be sold to Canadian Imperial Bank of Commerce (CM) for $210 million.
Among other investment managers, Franklin Resources Inc. (BEN) announced preliminary AUM of $815.0 billion by its subsidiaries for June, down 3.7% from the prior month. Another investment manager, Legg Mason Inc. (LM) is expected to announce preliminary AUM for June by the middle of this month.
We expect Invesco's cost-control initiatives to improve its operating leverage sign! ificantly over the long term. Additionally, meaningful capital deployment activities continue to enhance shareholder value. However, the volatile U.S. dollar, high debt levels and rising expenses remain plausible concerns. Overall, the company is poised to benefit from improved global investment flows, given its broad diversification.
Invesco is scheduled to release fiscal third-quarter 2013 results on Jul 31, 2013. The Zacks Consensus Estimate for the quarter is 52 cents. The earnings ESP (Read: Zacks Earnings ESP: A Better Method) for Invesco is 0.00% for the second quarter. This, along with its Zacks Rank #3 (Hold), reduces the chances for a positive earnings surprise.