By Manya Saini and Pritam Biswas

(Reuters) – Lazard’s asset management business saw net outflows of $7.5 billion in August after one of its clients switched to a passive investing strategy, a person familiar with the matter told Reuters on Thursday.

The bank was one of several asset managers to be impacted after the client restructured its developed market assets portfolio, the person said, without naming the client.

Passive investing typically refers to a buy-and-hold portfolio strategy that involves minimal trading in the market and mostly centers around investing in index-tracking funds.

Lazard’s total assets under management (AUM) fell sequentially to about $244.34 billion at August-end from $246.10 billion in July. Its AUM at August-end included $2.8 billion in gains from equities and $3 billion from foreign exchange.

However, its AUM was up from the year-earlier period.

Outside of the client, flows for the month were generally in line with the bank’s expectations and there was growing new business activity, the source said.

Although August was a volatile month for the U.S. equity market, the S&P 500 is still up about 16% so far this year, marked by gains across big-tech stocks, particularly those focused on artificial intelligence.

Lazard swung to a profit in the second quarter and beat analysts’ expectations as dealmaking surged. Like its industry peers, the investment bank has benefited from renewed activity in the M&A market and as companies raise money from stock and debt offerings.

The bank’s asset management as well as its restructuring and liability management practice businesses had helped sustain revenue for roughly two years as dealmaking activity stalled.

In the second quarter, asset management revenue at Lazard fell 1%, on an adjusted basis, to $265 million.

(Reporting by Manya Saini and Pritam Biswas in Bengaluru; Editing by Anil D’Silva)