Invesco AUM Declines in April - Analyst Blog

Invesco Ltd. IVZ reported a marginal dip in preliminary month-end assets under management (:AUM) for Apr 2014, similar to the prior month. The AUM for the month was $779.4 billion, down 1.0% from $787.3 billion at the end of Mar 2014.

Negative net long-term flows and outflows in PowerShares QQQ were the primary reasons behind the fall. Also, Invesco incurred a $13 billion outflow in the U.K.

However, foreign exchange led to a $1.8 billion rise in AUM. In April, Invesco's preliminary average total AUM was $776.9 billion and preliminary average active AUM was $636.4 billion.

At April end, Invesco's total equity AUM decreased 2.5% from the prior month to $378.3 billion. Further, balanced AUM was $49.8 billion, down 8.8% from $54.6 billion at the end of Mar 2014.

However, Invesco's fixed income AUM edged up 0.7% from the prior month to $179.0 billion. Alternative AUM came in at $94.5 billion, climbing 3.2% from the previous month. Further, the company's money market AUM increased 2.2% from Mar 2014 level to $77.8 billion.

Among other investment managers, Franklin Resources Inc. BEN announced preliminary AUM of $895.4 billion by its subsidiaries for Mar 2014, marking a 1.0% rise from $886.9 billion as of Mar 2014. Nevertheless, Legg Mason Inc. LM reported preliminary AUM of $673 billion as of Apr 2014, down 4.1% month over month.

Driven by cost control initiatives, Invesco's operating leverage is likely to improve significantly over the long term. Further, rebound in the equity market and improvement in global investment flows will act as catalysts. Even so, the company's high debt level and rising expenses remain matters of concern.

Currently, Invesco carries a Zacks Rank #3 (Hold). A better-ranked asset manager worth considering is Affiliated Managers Group Inc. AMG sporting a Zacks Rank #1 (Strong Buy).