Money management firms saw mediocre asset gains during the second quarter as choppy equity markets and uncertainty over interest rates had investors seeking the security of cash.
Money managers are "doing pretty well if they kept (assets under management) flat," said Robert Lee, managing director of equity research at Keefe, Bruyette & Woods Inc., an investment bank in New York.
"If the markets stay weak, that puts some pressure on asset levels, and translates into pressure on revenue and operating margins."
"After a couple years of strong market appreciation … investors are facing losses and going back to cash for a while," said Matt Snowling, senior analyst at Friedman, Billings Ramsey, an investment bank in Arlington, Va. "Although (managers) can tread water for a while, it's hard to continue in a choppy market."
A few managers reported profitability declines in the quarter ended June 30 — Janus Capital Group, Denver, for example, dropped 12%, while Waddell & Reed Financial Inc., Overland Park, Kan., posted a $33 million loss driven partly by a market-timing settlement charge. But most saw nominal growth in assets under management, increases that generally ranged anywhere from 0.03% at T. Rowe Price Group Inc., Baltimore, to 3% at Nuveen Investments Inc., Chicago.