Invesco’s September AUM Increases – Analyst Blog

On Monday, Invesco Ltd. (IVZ) reported its preliminary month-end assets under management (AUM) of $604.5 billion for the month of September, up 5.4% from $573.8 billion in August 2010. Excluding exchange traded funds (ETFs), Unit Investment Trust (UIT) and passive funds, AUM was $514.6 billion, up 4.1% from the prior month.

 

The increase in AUM was primarily attributed to the strengthening of foreign currencies as against the U.S. dollar (resulting in an AUM spike of $4.5 billion) and positive returns from financial markets internationally. However, these were partly offset by an exclusion of $1.5 billion of equity AUM as a result of the sale of Echo Point Investment Management to Old Mutual during the month.

 

At the end of September, Invesco’s total equity assets were $294.4 billion, up 8.7% sequentially. The company’s total fixed income assets were $130.8 billion, up 2.0% from $128.3 billion as of August 2010.

 

Invesco recorded $41.3 billion in balanced assets compared with $39.3 billion as of August 2010. Money market AUM was $70.0 billion (including $65.8 billion in institutional money market AUM and $4.2 billion in retail money market AUM), down 2.4% from $71.7 billion in August 2010. Alternative AUM came in at $68.0 billion, up 3.5% compared with $65.7 billion in August 2010.

 

For the quarter ended September 30, 2010, Invesco reported average assets of $583.3 billion. As of June 30, 2010, the company had 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 global equity markets.

 

Concurrently another firm, Franklin Resources Inc. (BEN), also reported preliminary month-end AUM of $644.9 billion by its subsidiaries for the month of September, up 7.4% from $600.4 billion as of August 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. Also, considering the fundamentals, we are maintaining our long term Neutral recommendation on the shares.