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Financial Services

Eaton Vance Misses Street in 3Q as Outflows Grow

Eaton Vance (EV) missed Wall Street sales and earnings expectations in the third quarter as more people withdrew their money than invested, launching a selloff on Wednesday that has pushed its shares down about 3%.

The Boston-based investment fund manager posted on Wednesday net income of $50.2 million, or 43 cents a share, compared with a year-earlier profit of $52.87 million, or 44 cents. The results fell short of average analyst estimates of 46 cents in a Thomson Reuters poll.

Revenue for the three months ended July 31 was $298.7 million, down from $327 million a year ago, missing the Street’s view of $304 million. Investment advisory and administrative fees fell 2% year-over-year while distribution and service fees declined by 3%.

Eaton Vance suffered from $1.4 billion in outflows compared with $1.9 billion in new money from the same period the year before. Outflows from Eaton Vance’s large-cap were $3.8 billion, more than offsetting the $2.4 billion of inflows.

"Accelerating outflows from our large-cap value strategy caused net flows to turn negative in the third quarter of fiscal 2012," Eaton Vance CEO Thomas Faust said in a statement.

However, Faust said improving large-cap value performance and a "robust pipeline of new institutional and sub-advisory opportunities" have helped the company turn optimistic on "flow trends in the coming months."

While assets under management were $192.9 billion as of July 31, a decrease of 3% the year earlier, Eaton Vance completed a purchase of 49% interest in Hexavest earlier this month.

The Quebec-based equity manager with more than $11 billion in client assets is expected to help expand Eaton Vance's product offerings in the U.S. and in offshore markets. 

Follow Jennifer Booton on Twitter at @Jbooton