Legg Mason undone by money funds Thursday, October 30, 2008
Image via WikipediaHaving pumped $2bn into their money funds within the last 12 months, Legg Mason's share price fell 78% over the same period and in the last quarter its' assets under management have fallen by a further 9% to $842bn.
Aside from money market fund troubles, their former star equity chief Bill Miller who outperformed the market for 15 years from 1991 has seen big reversals in the last few years in his main fund, "Legg Mason Value Trust". Between Jan-Jun 2008 it fell by over 28% and its' 10 year performance to Jun 2008 was lower than the S&P500.
Legg Mason operates funds under a range of brands operated by semi-autonomous fund management subsidiaries that tend to specialise in particular asset classes e.g. Western focusses on fixed income.
The Legg Mason sales and distribution teams will have a considerable uphill struggle to maintain existing business, let alone secure new wins. Their saving grace may be their ability to push product from other brands in their stable that have performed better and which have not been "tainted" with the current problems.