Legg Mason posted very strong returns in the third quarter, but they were marred by poor fund performance and $9.6 billion in net redemptions from its stock funds, Bloomberg reports.
Legg Mason’s profit rose 24% to $177.5 million, or $1.23 a share, up from $143.7 million, or $1 a share, in the year earlier period.
Revenue also was strong, rising 14% to $1.17 billion, while fees from mutual funds went up 23% to $590.7 million and fees from separately managed accounts rose 7.2% to $376 million.
“Performance drives flows,” commented Morningstar Analyst Andrew Richards. “Three of our largest equity managers continue to struggle with outflows, caused primarily by recent underperformance,” admitted Legg Chairman Raymond “Chip” Mason.
And that’s not going to improve anytime soon, according to Friedman Billings Ramsey Analyst Matt Snowling. “With equity outflows continuing and uncertain credit markets possibly threatening fixed income performance, we do not believe a quick turnaround is likely for Legg in the near term,” Snowling said.
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