Legg Mason Inc.’s Chief Executive Officer Joseph Sullivan said a “transition” of assets is under way in the bond industry, after the departure of Bill Gross from Pacific Investment Management Co. prompted investors to set billions of dollars in motion.

“We do expect to see increased momentum and demand for our our fixed-income offerings in coming months and quarters,” Sullivan said today in a conference call discussing Baltimore-based Legg Mason’s fiscal second-quarter earnings, while not specifically mentioning Pimco or Gross by name.

The departure of Gross from Pimco is benefiting rivals including Legg Mason’s Brandywine Global and Western Asset Management units as investors are reevaluating their funds. The two Legg Mason fixed-income managers together have a pipeline of $4.1 billion in investor commitments, and the bond funds would have taken in net new money had it not been for a $5.4 billion previously-disclosed redemption from a low-fee account, Sullivan said.

“Given the transition that is now under way between managers in fixed income, Brandywine, Western and our global distribution teams are seeing a very significant increase of conversations” with investors, said Sullivan

Legg Mason shares rose 0.5 percent to $52.21 at 10:52 a.m. in New York. The shares have climbed 19.5 percent this year before today, compared with 1.9 percent for the 18-member Standard & Poor’s index of asset managers and custody banks.

Assets Increase

Legg Mason, seeking to turn around performance after five years of investor withdrawals, reported an 7.9 percent increase in assets to $707.8 billion, up from $656 billion in the comparable quarter last year, the firm said today in a statement. The firm gathered $700 million in long-term funds in the quarter, with $1.6 billion in subscriptions into equity products. Clients pulled $900 million out of fixed-income products and added $12.7 billion in liquidity.

Net income in the three months ended Sept. 30 fell to $4.9 million, or 4 cents a share, from $86.3 million, or 70 cents a year earlier, after Legg Mason completed a debt refinancing that resulted in a charge of $107.1 million.

Sullivan, named chief executive officer of the firm in 2013 and chairman this month, said in March that this year will be one of growth for the money manager. He’s expanded Legg Mason’s offerings through two acquisitions this year, including the purchase last quarter of global stock manager Martin Currie. Legg Mason, whose equity and bond funds suffered withdrawals after slumping in 2007 and 2008, is luring investors back into its products.

“Long-term flows were positive for a second quarter in a row,” Daniel Fannon, an equity analyst at Jefferies Group LLC, said in a note to clients today. “Traction within the fixed income segments appears to be gathering momentum.”

Inflows were “in large part offset by negative market performance and foreign exchange of $9.9 billion,” the firm said in the statement. While assets remain below the $1 trillion peak in 2007, it’s a rebound from a low of $612 billion in September 2011.