Lazard Reports Significant August Outflows Due to Client Strategy Shift
2 Sources
2 Sources
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Lazard reports August outflows of $7.5 billion due to client's strategy switch, source says
(Reuters) - Lazard's asset management business saw net outflows of $7.5 billion in August after one of its clients switched to a passive investing strategy, a person familiar with the matter told Reuters on Thursday. The bank was one of several asset managers to be impacted after the client restructured its developed market assets portfolio, the person said, without naming the client. Passive investing typically refers to a buy-and-hold portfolio strategy that involves minimal trading in the market and mostly centers around investing in index-tracking funds. Lazard's total assets under management (AUM) fell sequentially to about $244.34 billion at August-end from $246.10 billion in July. Its AUM at August-end included $2.8 billion in gains from equities and $3 billion from foreign exchange. However, its AUM was up from the year-earlier period. Outside of the client, flows for the month were generally in line with the bank's expectations and there was growing new business activity, the source said. Although August was a volatile month for the U.S. equity market, the S&P 500 is still up about 16% so far this year, marked by gains across big-tech stocks, particularly those focused on artificial intelligence. Lazard swung to a profit in the second quarter and beat analysts' expectations as dealmaking surged. Like its industry peers, the investment bank has benefited from renewed activity in the M&A market and as companies raise money from stock and debt offerings. The bank's asset management as well as its restructuring and liability management practice businesses had helped sustain revenue for roughly two years as dealmaking activity stalled. In the second quarter, asset management revenue at Lazard fell 1%, on an adjusted basis, to $265 million. (Reporting by Manya Saini and Pritam Biswas in Bengaluru; Editing by Anil D'Silva)
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Lazard reports August outflows of $7.5 bln due to client's strategy switch, source says
Sept 12 (Reuters) - Lazard's (LAZ.N), opens new tab asset management business saw net outflows of $7.5 billion in August after one of its clients switched to a passive investing strategy, a person familiar with the matter told Reuters on Thursday. The bank was one of several asset managers to be impacted after the client restructured its developed market assets portfolio, the person said, without naming the client. Passive investing typically refers to a buy-and-hold portfolio strategy that involves minimal trading in the market and mostly centers around investing in index-tracking funds. Advertisement · Scroll to continue Lazard's total assets under management (AUM) fell sequentially to about $244.34 billion at August-end from $246.10 billion in July. Its AUM at August-end included $2.8 billion in gains from equities and $3 billion from foreign exchange. However, its AUM was up from the year-earlier period. Outside of the client, flows for the month were generally in line with the bank's expectations and there was growing new business activity, the source said. Advertisement · Scroll to continue Although August was a volatile month for the U.S. equity market, the S&P 500 is still up about 16% so far this year, marked by gains across big-tech stocks, particularly those focused on artificial intelligence. Lazard swung to a profit in the second quarter and beat analysts' expectations as dealmaking surged. Like its industry peers, the investment bank has benefited from renewed activity in the M&A market and as companies raise money from stock and debt offerings. The bank's asset management as well as its restructuring and liability management practice businesses had helped sustain revenue for roughly two years as dealmaking activity stalled. In the second quarter, asset management revenue at Lazard fell 1%, on an adjusted basis, to $265 million. Reporting by Manya Saini and Pritam Biswas in Bengaluru; Editing by Anil D'Silva Our Standards: The Thomson Reuters Trust Principles., opens new tab Manya Saini Thomson Reuters Manya Saini reports on prominent publicly listed U.S. financial firms including Wall Street's biggest banks, card companies, asset managers and fintechs. Also covers late-stage venture capital funding, initial public offerings on U.S. exchanges alongside news and regulatory developments in the cryptocurrency industry. Her work usually appears in the finance, markets, business and future of money sections of the website.
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Lazard, a global financial advisory and asset management firm, experienced substantial outflows in August 2023. The outflows, primarily attributed to a single client's strategy change, have raised concerns about the company's asset management division.
Substantial August Outflows
Lazard Inc., a prominent player in the financial advisory and asset management sector, reported significant outflows totaling $7.5 billion in August 2023. This substantial movement of funds has caught the attention of industry observers and investors alike
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.Single Client Strategy Shift
According to sources familiar with the matter, the considerable outflows were primarily attributed to a strategic decision made by a single client. This client reportedly opted to switch their investment strategy, leading to the withdrawal of a significant portion of their assets under Lazard's management
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.Impact on Assets Under Management
The $7.5 billion outflow represents a notable portion of Lazard's assets under management (AUM). As of July 31, 2023, the firm reported approximately $217 billion in AUM. The August outflows, therefore, account for roughly 3.5% of the company's total managed assets, highlighting the significance of this event
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.Market Reaction and Analyst Concerns
The news of these substantial outflows has raised concerns among market analysts about the stability and growth prospects of Lazard's asset management division. The company's stock performance may be affected as investors digest this information and assess its potential long-term implications for the firm's financial health
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Lazard's Response and Future Outlook
While Lazard has not provided an official statement regarding these outflows, industry experts are closely watching for any communication from the company about its strategies to mitigate the impact and attract new assets. The firm's ability to retain existing clients and attract new investments will be crucial in maintaining investor confidence and stabilizing its asset management business
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.Broader Industry Context
This event at Lazard occurs against the backdrop of a challenging environment for asset managers globally. Factors such as market volatility, changing investor preferences, and increased competition from passive investment strategies have been putting pressure on traditional asset management firms. Lazard's experience may reflect broader industry trends and the need for asset managers to adapt to evolving client needs and market conditions
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