Sales of $562 million declined 22% compared to the previous quarter and rose 23% compared to the same period in 2011, reflecting the lumpy nature of institutional business. The current quarter had outflows of $13 million compared to inflows of $231 million and $3 million during the third quarter of 2012 and fourth quarter of 2011, respectively.
Core Equity, Large Cap Growth, and Asset Strategy remain major contributors to the channel’s recent sales success. Redemption pressure on accounts we subadvise for one client in Europe persisted through the end of the year as European investors continued to underweight U.S. equities. Assets under management for these accounts aggregate to approximately 5% of total assets under management in our Institutional channel.
Management Fee Revenue Analysis
Both the sequential and year-over-year increase in quarterly revenues was due to higher levels of assets under management. The effective fee rate remains largely unchanged at 59.8 basis points during the current quarter, compared to 59.8 basis points during the third quarter and 60.1 basis points during the fourth quarter of 2011.
Underwriting and Distribution Revenue and Expense Analysis
Higher asset allocation fees were responsible for approximately 40% of the increase in revenues compared to the third quarter, while higher sales commissions from front-load products, insurance, higher Rule 12b-1 fees and financial plans also saw meaningful sequential increases. Direct expenses as a percentage of revenues declined due to lower payouts on client assets now serviced by the home office and lower incentive payments on investment products. Indirect expenses saw a small increase, mostly due to true-ups to our sales convention costs.
Compared to the same period last year, revenues increased because of higher asset allocation fees. A small increase in Rule 12b-1 fees was offset by lower front-load commissions. Direct expenses rose with associated revenues. Indirect expenses remain unchanged.