On Wednesday, Invesco Ltd. (IVZ) reported a rise in its preliminary month-end assets under management (AUM) for the month of December 2011. The company’s AUM for the reported month grew slightly by 0.5% to $625.3 billion from $622.4 billion at the end of November 2011.
Positive market returns and long-term net inflows were chiefly responsible for the rise in Invesco’s December AUM. However, foreign exchange drove a $1.3 billion drop in the AUM during the month under review.
Invesco’s preliminary AUM, excluding Exchange Traded Funds (ETFs), Unit Investment Trust (UIT) and passive funds, stood at $529.0 billion at the end of December 2011, up 0.2% from $527.7 billion in the prior month.
As of December 31, 2011, Invesco’s average assets stood at $621.7 billion, while the total value of average assets, excluding ETFs, UIT and passive funds, came at $528.1 billion.
At December-end, Invesco’s total equity assets stood at $271.0 billion, up 0.5% from $269.6 billion, recorded in the preceding month. Similarly, the company’s total fixed income assets inched up 0.9% to $149.0 billion from $147.6 billion, as of November 2011.
During the month under review, Invesco’s balanced assets were $44.6 billion, rising 1.8% from the prior month. Additionally, alternative AUM remained modestly stable at $86.7 billion during the reported month from $86.6 billion in the prior month.
However, Invesco’s money market AUM stood at $74.0 billion (including $69.4 billion in institutional money market AUM and $4.6 billion in retail money market AUM) in December, dipping nearly 1.1% from $74.8 billion, recorded in November 2011.
Peer Performance
Earlier this week, Franklin Resources Inc. (BEN), one of the peers of Invesco, reported its preliminary month-end AUM for December 2011. The company reported preliminary AUM of $670.3 billion for its subsidiaries, as of December 31, 2011, reflecting a decline of 0.8% from $675.8 billion as of November 30, 2011.
Our Viewpoint
Improving long-term investment performance, propelled by a gradual recovery in the global equity market, is likely to boost Invesco’s operating results over the mid to long term. Although the operating leverage is expected to improve significantly over the long term because of Invesco’s cost control initiatives, rising operating expenses will remain a near-term headwind to the company.
Though Invesco is poised to benefit from improved global investment flows resulting from its broad diversification, we remain concerned about the increased redemptions and a volatile U.S. dollar.
Invesco currently retains a Zacks #3 Rank, which translates into a short-term ‘Hold’ rating. Further, considering the fundamentals, we are maintaining a long-term “Neutral” recommendation on the stock.
To read this article on Zacks.com click here.
Zacks Investment Research
