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Morgan Stanley asset management earnings slump

GLOBAL - Third-quarter profits at Morgan Stanley's asset management division fell by 23% although assets under management rose 5%.

"Asset Management reported pre-tax income of $125m, 23% lower than last year's $162m," the bank said in its latest earnings report. The quarter's pre-tax margin was 20% against 24% a year ago.

Net revenues at the unit were down 7% to $634m - primarily reflecting lower private equity revenues.

It said: "Higher management and administration fees, driven by higher assets under management, were offset by a decline in distribution and other fees."

Assets under management or supervision at August 31 2006 were $448bn, up $20bn, or 5%. The increase resulted from market appreciation "partly offset by customer out-flows".

The arm launched 23 new products for its institutional and non-US client bases - including 10 in alternatives, 10 in equities and three in fixed income.

The bank reported overall net income from continuing operations was up 59% at $1.8bn.

"Despite challenging market conditions, Morgan Stanley achieved its best third quarter ever, demonstrating the continued progress we're making in executing on our plan to improve financial performance," said chairman and chief executive John Mack.

Elsewhere, Putnam Investments, the asset manager that has been losing assets since the market timing scandal three years ago, may be sold by parent company Marsh & McLennan. MMC said it was "considering options" for the firm.

And meanwhile State Street Global Advisors has named Peter Leahy as chief product officer, a new role.

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