Two analysts at Friedman, Billings, Ramsey & Co. today told clients they expect a 14.7% decline in money management assets under management in the fourth quarter and an average manager decline of 15.5% in revenues.
In a forecast issued today, FBR analysts Matt Snowling and Bill Jackson also said they foresee a year-over-year decline of 16.2% in total 2009 revenues among managers.
“Given the overall decline in industry revenues and limited recourse available to managers aiming to cut costs, we remain cautious on the industry group and await more clear evidence that a trough in earnings is in sight before we can turn more positive on the group,” Messrs. Snowling and Jackson wrote in a note to clients.
Messrs. Snowling and Jackson cited as reasons for the decline in both AUM and revenue industry cost-cutting now under way resulting in staff reductions at major managers, a decline of operating margins to 23% next year from 29% in 2008, and an increasingly difficult operating environment created by investor deleveraging, bearish sentiment, rising uncertainty and the flight to cash.
The analysts also predicted the current and future quarters will see fund managers report significant losses from their own fund product investments.