The two large money managers, both based in Baltimore, showed a marked difference in fund flows with Legg Mason again suffering sharp outflows and T. Rowe continuing to see inflows.

Legg Mason, which has been dogged by the weak performance of the main fund managed by one-time star stock picker Bill Miller, is "pursuing new initiatives to deliver improved results," the company's chief executive, Mark Fetting, said in a statement, naming new products, distribution partnerships and operating efficiencies as priorities.

Legg Mason shared were down 5 percent in premarket trading, while T. Rowe Price's were up 1.3 percent.

Legg's results contrasted with those of other U.S. asset managers, which have largely beaten lowered expectations. Companies that beat expectations include Janus Capital Group (NYSE:JNS - News), BlackRock Inc (NYSE:BLK - News), Affiliated Managers Group (NYSE:AMG - News), AllianceBernstein Holding (NYSE:AB - News) and Calamos Asset (NasdaqGS:CLMS - News).

Legg Mason, the second-largest publicly traded U.S. asset manager, posted a wider-than-expected loss as it took a charge related to a bail-out of money market funds exposed to risky securities and suffered outflows from underperforming funds.

Legg reported a net loss of $31.3 million, or 22 cents a share, for its fiscal first quarter, compared with net income of $191 million, or $1.32 a share, a year earlier. Analysts on average had expected a loss of 15 cents, according to Reuters Estimates.

The company took a charge of $155.4 million, or $1.09 a share, for the quarter related to the bailing out of money market funds, it said.

This was the second straight quarterly loss for Legg. It had posted a net loss of $255.5 million, or $1.81 a share, for its fiscal fourth quarter, ended March 31, which was its first-ever loss.

Assets under management, the main driver of revenue and profit at money managers, fell to $922.8 billion from $992.4 billion a year ago and $950.1 billion at end of March.

Clients pulled out a net $18.4 billion from Legg's funds in the quarter, Legg said. Equity and fixed income outflows were about $11 billion each, while its money market products saw inflows of $4 billion.

T. Rowe, which is a strong player in the retirement arena, posted a flat net income of $162 million for its second quarter. Earnings per share rose to 60 cents a share from 58 cents a year earlier, due to a lower number of shares outstanding. Analysts had expected, on average, earnings of 59 cents, according to Reuters Estimates.

Its funds reported inflows of $8.1 billion in the quarter, lifting assets under management to $387.7 billion at the end of June, from $378.6 billion at the end of March.

(Reporting by Muralikumar Anantharaman; Editing by Steve Orlofsky)