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Money Management

Moody’s: Money manager net inflows up for second consecutive quarter

Net inflows into long-term strategies managed by 14 publicly traded non-bank-owned U.S. money managers were up 6% to $91.8 billion in the quarter ended Dec. 31, a new report from Moody's Investors Service showed.

Net flows for the manager group excluding BlackRock (BLK) (whose numbers tend to skew results) increased 3.7% to $11.2 billion during the three-month period.

The fourth quarter was the second consecutive quarter of positive net inflows after nine prior quarters of net outflows, wrote Danielle Reed, a Moody's vice president–research writer and author of the report, which was released Monday.

The average long-term assets under management for the group of money managers was up 4% for the second quarter in a row, rising on "strong global equity markets and modest organic growth," Ms. Reed said, adding that "high equity valuations continued to shift the asset class distribution toward equities in the quarter."

Total base advisory fees, including performance fees, for the manager universe grew 2.2% in the quarter ended Dec. 31, compared to 4.1% in the previous quarter.

"The lower growth in base fees relative to average AUM reflects the more rapid growth in low-fee passive products," Ms. Reed concluded in the report.

For the full year ended Dec. 31, average AUM growth of the manager universe was 16.9%, while base management fees rose 13.9%.

Moody's outlook for global asset managers is "stable" in 2018, in contrast to 2017.

"Our improved outlook reflects signs that the industry is adapting to the broad shift into passive products," Ms. Reed said, noting "active managers are introducing new products, adapting distribution and better controlling expenses."

She added that active money managers are introducing passive products into their investment strategies and are moving into alternative investment asset classes.

"This has led to improving, although still weak, active net flows along with stable overall fee rates and margins," Ms. Reed said.