Legg Mason, a US firm once associated with one of the best-performing fund managers in the world, is licking its wounds after it reported last week a net loss in the first quarter of its fiscal year ending on 30 June.

The firm also made a net loss of $255.5 million in the quarter ending on 31 March this year, in contrast to a profit of $191 million in the first quarter of its financial year in 2007.

The latest loss was caused by charges of $155.4 million connected to its support, as previously announced, for money market funds.

Assets under management were $922.8 billion, down by 3 per cent from $950.1 billion at 31 March, 2008, and down 7 per cent from $992.4 billion at June, 2007.

Legg Mason has been hit by poor fund investments. It has lost 48 per cent of its market value in 2008, according to Bloomberg. The company injected $2.15 billion into seven money funds to cover potential losses on debt issued by structured investment vehicles.

Stock funds run by Bill Miller and Bruce Sherman were hit by investor withdrawals, while Baltimore rival T. Rowe Price brought in $8.1 billion in new cash during the quarter.

Mr Miller has been one of the stars in the global fund management industry, one of a handful of managers seen as able to outperform markets over a long run of years. But his Legg Mason Value Trust, which beat the Standard & Poor's 500 Index for a record 15 years, is in its third year of trailing the US benchmark index.

By contrast, rival US asset manager Janus Capital said last week that it had posted a higher quarterly profit as assets under management rose and its funds saw inflows. Janus said second-quarter net income rose to $66.3 million, or 41 cents a share, from $48.8 million, or 27 cents a share, in the year-ago quarter.