Strong fourth-quarter equity returns boosted assets under management of the largest publicly traded money managers.
T. Rowe Price Group Inc., Baltimore, reported the highest AUM percentage gains for the quarter at 7%. It ended 2013 with a record $692.4 billion, up 20% from a year earlier, the highest jump among managers that have reported fourth-quarter earnings.
T. Rowe had $100 million in net inflows for the quarter, up from $7.4 billion in net outflows the previous quarter.
The highest year-over-year AUM increase came despite the firm's having $12 billion in net outflows for the year. T. Rowe has seen outflows from institutional investors in nine of the last 10 quarters, but excluding some large sovereign wealth funds rebalancing or changing asset allocation strategies, the institutional business is in “inflow mode,” said Christopher Shutler, an equity research analyst at William Blair & Co., Chicago.
T. Rowe gained about $4 billion in new target-date fund assets, offsetting the $3.7 billion in institutional outflows.
“I'm encouraged the institutional outflows are diminishing,” Mr. Shutler said. “It's gotten smaller the last couple quarters ... and performance remains excellent.”
The Standard & Poor's 500 index was up 10.49% for the quarter ended Dec. 31, slightly above the Russell 1000's 10.22%. The MSCI All Country World index ex-U.S. returned 4.85%. Fixed income, on the other hand, was nearly flat with a -0.14% return for the quarter. The yield on the U.S. Treasury 10-year note increased 42 basis points to 3.03%.
“Despite all the hoopla around better equity flows, and while it seemed a little better in the fourth quarter, there was nothing to write home about” in terms of inflows, said Robert Lee, equity research analyst at Keefe, Bruyette & Woods in New York. “I didn't really see it manifest itself in new business in the fourth quarter. It's been hit or miss for managers.”
Market appreciation and income were the main sources of growth for most managers, but J.P. Morgan Asset Management, BlackRock Inc. and BNY Mellon Investment Management, all in New York, reported strong net inflows for both the quarter and the year.