Rising markets boost the capacity of asset managers

Rising revenue growth ուժեղ Strong influx of investors is a welcome change for many US asset managers, although it is perceived as a temporary deterrent to strategic challenges.

For the first time in four years, listed U.S. executives are expected to increase their earnings throughout the calendar year. A wave of stock market ratings boosted industry-managed assets. For example, BlackRock reported a record $ 9 AUM at the end of March, up 39 percent from $ 6.45 billion in the previous 12 months.

Share prices have risen, are they going well in 2021? Ahead of the big market, led by Invesco, Ameriprise Financial and Franklin Resources.

“Many asset managers were stocks with low-rated securities, selling ebitda six times,” said Michael Cypress, an analyst at Morgan Stanley. “Actively managed asset flows and performance are better; we see an improvement in operating margins and profits.”

“The number of assets owned by the industry has risen sharply due to market valuation, retail investors are following the market, investing more money,” said Credit Signenthaller, an analyst at Credit Suisse. “The stock market cannot continue to contract at this rate, so flows will slow down over the next two quarters.”

Any mitigation of flows – variable market performance – will shift the focus to the long-term challenges facing the industry. Strong competitive pressure on wages և low performance against the relentless growth of passively traded goods have spurred endless periods of industrial consolidation.

The industry chart shows the stable stock flows ակտիվ active asset prices (% change year *) showing that investors find value in the shares of asset managers

Invesco acquired Oppenheimer Funds in 2018, and last year Morgan Stanley, surprisingly, bought Eaton Vance, focusing on expanding its presence and providing more services to customers in one place. The sector is facing cost pressures due to the introduction of technologies, the exchange of funds, and the expansion into private markets.

Invesco CEO and CEO Marty Flanagan conveyed a sense of industry caution when the $ 1.4 billion asset manager generated strong revenue in the first quarter, with long-term inflows of $ 24.5 billion. “I do not think the strategic dynamics have changed,” Flanagan told analysts during a earnings call. “Customers expect more from their asset managers, you need scale in all areas of the organization.”

The record for transactions is mixed. Saving money is easier said than done.

“Better deals include adding a new product or customer base to your product distribution network,” said Tsipris. “In this industry, there can be flows, new money.”

Linear Global Monthly Flow Chart ($ Billion), which shows that actively managed stocks have had huge outflows

One target for the industry is that China has begun issuing patents for Western Wealth Fund managers who can change customer entries.

However, the direction of travel continues to be focused on stock exchange funds. After a record $ 503 billion inflow of US ETFs last year, according to the CFRA, investors are still paying 26 $ 269 billion in ETFs by 2021. One of the beneficiaries of the ETF boom, which is widely regarded as an attractive target for a larger asset manager, is the Wisdom Tree.

“Losing mutual fund macro trends to ETFs ղեկավար wealth managers moving to model portfolios means we can benefit և take market share from others,” Aret Lilie, President of Wisdom Tree և CEO, told the Financial Times. Executive Director: “Our core business is exciting, we’re expanding,” he said, while acknowledging that “we know we’re attractive.”

The secular winds facing industry explain the large gap in asset managers’ wider market assessments. Despite a sharp rise in stock prices, the sector traded 13.2 times lower in earnings per share for the next 12 months and 22.2 times lower than the broader S&P 500, according to KBW.

KBW says a year of strong revenue growth for traditional asset managers should lead to a 20 percent increase in average earnings this year, “slowing to a healthy 9 percent in 2022.”

Division between asset managers

“Estimates in the long-term historical context remain cheap, but given the long-term growth concerns, they should be,” said KB Lee, an analyst at KBW. The strong work of Invesco խմբի Franklin, an affiliate management team, “emphasizes that investors will respond to signs of improved performance,” especially when [asset managers’] “Shares come from low ratings,” Lee said.

However, there is a split among asset managers, as highlighted by their respective growth rates, according to Credit Suisse. The long-term organic growth rate of the industry, driven by net controlled assets և assets, has been restored since the beginning of last year, led by BlackRock և Invesco, but AMG, Franklin Resources և T Rowe Price have lagged behind their peers. :

“The long-term challenges remain: structural pressures on the industry, leaving compensation transfers with lower rents and flows,” Tsipris said.

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