Publicly traded money managers' revenue growth declined significantly in 2012, despite strong returns in the markets, according to Casey, Quirk & Associates LLC.
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. The 37 managers had an average 4.9% growth rate in 2012.
“It's difficult to maintain growth rates,” said Benjamin Phillips, partner at Darien, Conn.-based Casey Quirk. “There are fewer organic flows going into the industry.”
Money management subsidiaries' median growth rate of 5% in 2012 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 13% and 29% in 2011 and 2010, respectively, compared with 6% and 11%, 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 with 25% for the 12 subsidiaries.
There might be less of a gap in the future between the independent and subsidiary managers, Mr. Phillips said. Parent institutions are coming up with more creative ways to retain talent and insurance companies want to make their subsidiaries look more like pure-play asset managers, he added.