Legg Mason's feats include wealth management and mutual fund management. The financial services firm has several subsidiaries that offer asset management, trust services, and annuities to retail and institutional investors. The company manages about 140 mutual funds under the Legg Mason, Western Asset, and Royce Funds banners. Other offerings include closed-end funds and separately managed accounts. Legg Mason distributes its products through its own offices, retirement plans, and financial intermediaries, as well as through an agreement with Morgan Stanley Smith Barney. The company operates primarily in North America and the UK, but also has offices in about 15 other countries.
The Legg Mason Funds comprise equity, income, investment-grade, and municipal securities funds, while the Royce Funds concentrate on small- and micro-cap stocks. Western Asset Management markets its funds, which invest primarily in fixed income securities, to retirement plans and other institutional investors.
Legg Mason also manages assets for institutional and high-net-worth clients through several subsidiaries, including Philadelphia's Brandywine Global Investment Management, New York-based ClearBridge Advisors, and Private Capital Management in Naples, Florida. Boston-based Batterymarch Financial Management uses quantitative strategies to manage portfolios of US and international equities for institutional investors; Legg Mason Investment Counsel & Trust performs trust services for individual and employee benefits plans. In fiscal 2012 Legg Mason sold Cincinnati-based wealth manager Bartlett & Co.
Altogether, Legg Mason has approximately $645 million of client assets under management, about a quarter less than it had as recently as 2008. More than half of that figure is invested in fixed income products. The rocky economy prompted many clients to pull out large amounts of money from their mutual funds, leading to losses for the company in 2009. Recovery in the financial markets had a hand in Legg Mason returning to profitability the following year, despite a decline in revenues of more than 20%. Cost-cutting and restructuring measures enacted by the company helped, too. However, clients have continued pulling money from their funds, albeit at a slower rate, and Legg Mason lost some $16 billion in liquidity assets under management when Morgan Stanley Smith Barney amended its agreement with the company in 2011.
Despite challenges with client outflows and the continuing global downturn, Legg Mason's revenues and net income have remained relatively stable after rebounding from the 2009 losses. Profits slipped some 13% in fiscal 2012 to $220.8 million due to an increase in incentive compensation related to Western Asset Management; this was offset somewhat by restructuring efforts which have saved the company money. The amended agreement with Morgan Stanley Smith Barney also contributed to a reduction in Legg Mason's earnings in addition to its liquidity assets under management: Total revenues fell 4% in 2012 to $2.7 billion. – less