Publicly traded money managers' revenue growth declined significantly in 2012 despite strong returns in the markets, according to Casey, Quirk & Associates.
The median revenue growth in 2012 was 4.4% for the 25 publicly traded independent money managers and 12 subsidiaries of public financial institutions, down from an 8% gain in 2011 and 22% in 2010.
“It's difficult to maintain growth rates,” said Benjamin Phillips, partner at Casey Quirk. “There are fewer organic flows going into the industry.”
Money management subsidiaries' median growth rate in 2012 at 5% actually outpaced that of independent managers, at 4%. That was a large reversal from the previous two years, when independent manager revenue growth was a median 29% and 13% in 2010 and 2011, respectively, compared to 11% and 6%, respectively, for subsidiaries in the same time frame.
However, independent managers had much stronger profit margins in 2012, in line with previous years. The 25 listed managers had a median profit margin of 33% compared to 25% for the 12 subsidiaries.
Growth and margin rates are typically in line with private money managers, but Mr. Phillips said it will be interesting to see whether the gap widens between the two as investors are pumping more money into alternative and innovative strategies that are typically run by private managers.
Casey Quirk will release an analysis on private managers in the second quarter.