WhileLegg Mason Inc.Chairman, President and CEO Joseph Sullivan was disappointed with the financialresults for its most recently concluded quarter, he urged analysts not to readtoo much into outsized institutional outflows.
Speakingon an earnings call, Sullivan described the outflows as the company's"worst" in more than three years as investors pulled about $13.2 billionduring the quarter. Amongthe company's affiliates, WesternAsset Management Co. alone was hit by $5.8 billion of long-termoutflows during the quarter.
Sullivansaid Legg Mason may see further outflows of $4 billion in April due to "abit of institutional reallocation activity."
"Peoplesay, institutions don't move things as quickly, and there's a lot of truth tothat. But at the same time they can be a bit tactical and with the volatilitywe saw in the first calendar quarter of 2016, it is not unusual that people aretaking some chips off the table," he said."They are positioning ahead of [the Federal Reserve] or what they thinkmight happen with the Fed… I would be careful not to overreact to [outflows]."
Sullivanalso stressed that the unfunded book of business remains strong at more than$10 billion, adding that the company's past record of realizing those unfundedwins is very high.
Theexecutive drew attention to the industrywide trend of from actively managed funds andemphasized the need for the company to be present "across the spectrum ofinvestment products and styles." Legg Mason recently engaged in threedeals, which Sullivan said will help the company provide investors with a broadrange of choices.
Theasset manager acquired an 82% equity interest in real estate investment firmClarion Partners. The company's deal to merge its Permal hedge fund platform with EnTrustCapital is expected to close in early May.