Invesco's AUM Declines in August - Analyst Blog

On Friday, Invesco Ltd. (IVZ) reported its preliminary month-end assets under management (AUM) of $573.8 billion for the month of August, down 1.1% from $580.3 billion in July 2010. Excluding exchange traded funds (ETFs), Unit Investment Trust (UIT) and passive funds, AUM was $494.5 billion.

 

Decline in the AUM was primarily due to dwindling global financial markets and weakening foreign currencies as against the U.S. dollar, which led to a fall of $2.0 billion in AUM. However, these were partly offset by an inclusion of $3.1 billion of equity AUM from the acquisition of Concord Capital Limited, an Australian asset management firm, during the month.

 

At the end of August, Invesco's total equity assets were $268.8 billion, down 3.7% sequentially from $279.2 billion. The company's total fixed income assets were $128.3 billion, up 3.1% from $124.5 billion as of July 2010.

 

Invesco recorded $39.3 billion in balanced assets compared with $40.2 billion as of July 2010. Money market AUM was $71.7 billion (including $67.5 billion in institutional money market AUM and $4.2 billion in retail money market AUM), slightly up from $70.7 billion in July 2010. Alternative AUM came in at $65.7 billion, flat compared with July 2010.

 

As of June 30, 2010, Invesco reported AUM of $557.7 million, up 21.8% from the prior quarter and 34.6% year over year, primarily due to increased market values as a result of the gradual recovery of the global equity markets.

 

On Thursday, another firm, Franklin Resources Inc. (BEN), reported preliminary month-end AUM of $600.4 billion by the company's subsidiaries for the month of August, slightly down from $602.9 billion as of July 31, 2010.

 

Invesco operates as an independent investment manager and offers a diverse array of investment products and services. We expect a significant increase in operating leverage from Invesco's expense reduction initiatives. Furthermore, due to its broad diversification, the company should benefit from the improvement in global investment flow.

 

Invesco currently retains a Zacks #3 Rank, which translates into a short-term Hold rating. Considering the fundamentals, we are maintaining our long term Neutral recommendation on the shares.