LOUISVILLE, Ky. - Investment managers saw their profit margins drop to 40% in 1994 from 42% in 1993, according to a report by Eager & Associates, Louisville.
When Eager began compiling its survey in 1988, profit margins were 45%.
The survey also found that smaller investment management firms continue to operate at significantly higher profit margins than larger firms.
And, compensation and benefits constituted almost two-thirds of expenses at the average firm.
Jim Bowen, senior project manager at Eager, is heartened by the results.
"Contrary to the expectations of many in the industry, profit margins continue to hold up fairly well. The popularity of index management apparently has not had a significant impact on profitability at the average firm," he said.
The survey included detailed responses from 37 firms regarding staff, marketing, asset flows, fees and expenses.