Publicly traded managers' growth propelled by a rising stock market
Skip to main content
pilogo-NEW
Subscribe
  • Subscribe
  • My Account
  • login
  • NEWS
    • Asset owners and the coronavirus
    • Alternatives
    • Consultants
    • Coronavirus
    • Defined Contribution
    • ESG
    • Frontlines
    • Hedge Funds
    • Investing / Portfolio Strategies
    • Money Management
    • Pension Funds
    • People Moves
    • Private Equity
    • Real Estate
    • Searches & Hires News
    • SECURE Act
    • Special Reports
    • WorldPensionSummit
    • Ron Schmitz
      Pandemic drives faster transition for Virginia to private markets
      Mubadala Investment Co. logo
      Mubadala draws on portfolio in coronavirus fight
      T.J. Carlson
      Texas Muni reduces downside risk during pandemic, finding opportunities now
      Scott Davis
      ‘Triage plan’ at Indiana system helped stem losses
    • Comvest closes credit fund at $1.3 billion
      Wall Street signage in the Financial District of New York
      Assets in alternative investments set record in 2020
      Non-profit questions dividend recapitalization play at Ares portfolio company
      Walker & Dunlop appoints managing director
    • Philip Pearson
      Hymans Robertson chooses head of LGPS investment
      Daniel Celeghin
      Indefi hires New York-based managing partner
      Hub International continues buying spree with IBG acquisition
      Callan brings on 2 executives
    • Insurers taking on more portfolio risk as pandemic ebbs – survey
      American flags outside the New York Stock Exchange
      Stock shorts collapse as no hedge fund wants ‘head ripped off’
      Michelle Dunstan
      Move to link exec pay to ESG integration growing
      The J.P. Morgan Chase logo displayed at a branch bank
      J.P. Morgan sells $13 billion of bonds in largest-ever bank deal
    • Pentegra joins with EPIC to offer 3(16) fiduciary services
      Interest rises in keeping retiree assets in-plan
      Joseph Healy
      Smaller DC plans place greater focus on improving financial wellness efforts
      Pentegra launches pooled employer plan
    • CDPQ boosts low-carbon assets to 10% of portfolio
      White House sets ambitious goal for greenhouse gas emissions by 2030
      Yale rolls out 5 principles for endowment on fossil-fuel investing
      Pension funds hear from beneficiaries on ESG – report
    • Riscura stories
      Dystopian tales explore altered retirement reality
      Joel Holsinger
      Ares wants to do good – and profit – with fund
      Girls Who Invest
      MetLife plans 3 internships for Girls Who Invest scholars
      Model home
      Resmark sees niche in buying, leasing model homes
    • Credit Suisse logo
      Credit Suisse expects further hit from Archegos scandal
      Karen Karniol-Tambour
      Bridgewater appoints 2 co-CIOs to oversee new sustainable investing group
      Hedge funds post best first-quarter return since 2000
      Jason Kephart
      Managers see good times ahead in 2021
    • CDPQ boosts low-carbon assets to 10% of portfolio
      White House sets ambitious goal for greenhouse gas emissions by 2030
      San Joaquin County casts net for core bond managers
      Denmark’s ATP plans bid to build North Sea energy island
    • Bill Hench
      First Eagle gives wing to small-cap equity team with liftout from Royce
       Kaitlin M. May
      Putnam Investments names head of global institutional management
      Paul Griffiths
      HSBC Asset Management selects next global head of institutional business
      Alex Bernhardt
      BNP Paribas AM picks global head of sustainability research
    • Denmark’s ATP plans bid to build North Sea energy island
      PennPSERS taps Verus for oversight consulting services amid probe
      State pension plan funding advances in first quarter – Wilshire
      Sacramento County Employees rebalances equity, fixed-income portfolios
    • Walker & Dunlop appoints managing director
      Bill Hench
      First Eagle gives wing to small-cap equity team with liftout from Royce
      Philip Pearson
      Hymans Robertson chooses head of LGPS investment
       Kaitlin M. May
      Putnam Investments names head of global institutional management
    • EQT closes latest private equity fund at $18.7 billion
      U.S. $100 bills
      AlpInvest raises $3.5 billion for latest co-investment fund
      ILPA members making diversity a bigger priority in private equity
      European private equity deal value, volume hit records for first quarter
    • J. Tomlinson Hill
      Two Sigma takes quant expertise into real estate investing
      BentallGreenOak closes latest European fund at $2.3 billion
      Cohen & Steers adds team for new private real estate business
      Australia’s Centuria makes takeover bid for Primewest
    • Andy Schreiner
      New PEPs targeting firms without retirement plans
      Jackie Walorski
      Contribution catch-up for caregivers gaining favor
      Retirement cartoon
      Hopes rising for retirement readiness in 2021
      Neal and Brady
      Retirement security could be only issue both sides accept
    • A coin representing Bitcoin cryptocurrency in the U.K.
      Cryptocurrency and digital assets
      Corporate pension contributions
      Eddy Awards 2021
      COVID-19: One year in
    • U.S. still a key market for investors
      Collected coverage of P&I's 2020 WorldPensionSummit
      Pedestrians pass a large advertisement on the Arndale Center shopping mall reading 'Act now to avoid a local lockdown' in Manchester, England
      COVID-19 puts new opportunities and risks on the agenda - WPS panelists
      Screens display stock price information over the trading floor of the NYSE Euronext exchange in Paris
      Private assets will continue to grow in portfolios – WPS panelists
  • Data
    • Research Center
    • Searches & Hires Database
    • Searches & Hires News
    • RFPs
    • Charts / Infographics
    • Sponsored Research
    • Trackers
    • Q2 2020 searches and hires overview report
      Q2 2020 money manager M&A activity summary
      Q2 2020 legal overview report
      Q1 2020 searches and hires overview report
    • Gresham, Ore., hunting for 457 plan consultant
      San Joaquin County casts net for core bond managers
      Rhode Island commits $25 million to buyout fund
      Chicago Policemen on lookout for passive manager
    • Gresham, Ore., hunting for 457 plan consultant
      San Joaquin County casts net for core bond managers
      Rhode Island commits $25 million to buyout fund
      Chicago Policemen on lookout for passive manager
    • Emerging Market Debt Manager Services
      Real Assets Consultant
      Passive Investment Management Services
      Active Extended Global Credit Manager Search
    • High-yield spreads narrow, default rates drop
      Private real estate funds continue rebound
      Managed account adoption stalls in 2020
      U.S. bonds have worst quarterly return since 1981
    • Institutional Investors: Shared Expectations, Divergent Paths
      Global Investor Study 2016
      Workplace Financial Wellness
    • U.S. Endowment Returns Tracker
      Pension Fund Returns Tracker
      Earnings Tracker
      Corporate Pension Contribution Tracker
  • Insights
    • Opinion
    • White Papers
    • Industry Voices
    • Letters to the Editor
    • Partner Content
    • Publisher's Update
    • Marcie Frost
      CalPERS: Urgency underscores all areas of providing retirement security
      BPTW cartoon
      P&I’s Best Places to Work marking a milestone
      CalPERS cartoon
      Urgency underscores CalPERS' search for a CIO
      Multiemployer plans cartoon
      Money — but no fixes — for multiemployer plans
    • Bipsync Client Stories: RMS in Action at Pensions and Superannuation Funds
      COVID-19 Makes LP Portfolio Management More Important Than Ever
      China: the outlook is bright for longer-term investors
      Finding Differentiation in Securitized Assets
    • John Bakarat
      Commentary: COVID-19 and real estate debt – where investors should be looking
      Jake Remley
      Commentary: Inflation expectations vs. reality in the bond market
      Greg Shea and Steven Kindred
      Commentary: The solution for yield-seeking allocators may be hiding in plain sight
      Jim Park
      Commentary: Asian Americans, Pacific Islanders face ‘bamboo ceiling’ in money management
    • Marcie Frost
      CalPERS: Urgency underscores all areas of providing retirement security
      Writer using a typewriter
      OCIO industry needs to adopt GIPS
      Writer or journalist workplace. stock illustration
      Even as it assails China, Trump administration emulates it
      Skeptical of Main Street support for proxy adviser proposal
    • P&I Content Solutions
      Research for Institutional Money Management
      P&I Content Solutions
      Top questions for institutional investors
      Sponsored Content By Newton Investment Management
      Growth and Innovation in Emerging Markets
      P&I Content Solutions
      In Challenging Markets, Systematic Global Macro Strategies Could Hold Opportunity
    • Help us help you by supporting quality journalism
      You Must Believe in Spring
      Everything Must Change
      Tomatoes & Investments
  • Multimedia
    • Videos
    • Webinars
    • Polls
    • Slideshows
    • Charts / Infographics
    • Invesco logo shown on the floor of the New York Stock Exchange
      watch video
      1:28
      Invesco’s bid for performance gains
      watch video
      1:23
      The passive fixed-income glut
      watch video
      1:38
      Is it time for DC plans to embrace private equity?
      watch video
      5:39
      The coronavirus pandemic: One year later
    • New Outlook on Income: A Framework for Evaluating DC Retirement Income Solutions
      Investing in infrastructure at the right price
      Time for Action: Shifting Pension Dynamics from a Macro and Regulatory Relief Perspective
      Understanding the PEP Evolution
    • POLL: Cryptocurrency investing
      POLL: The Biden infrastructure plan
      POLL: Retirement income solutions
      POLL: Working after the pandemic
    • view gallery
      9 photos
      Coronavirus and the markets
      view gallery
      22 photos
      The 1,000 largest retirement funds: 2020
      view gallery
      10 photos
      Outlook 2020
      view gallery
      10 photos
      2019 as seen through the eyes of Roger
    • High-yield spreads narrow, default rates drop
      By the Numbers for April 2021
      Graphic: The state of DC plans
  • Events
    • Conferences
    • Webinars
    • DC Investment Lineup Virtual Series
      ESG Investing Virtual Series
      Private Markets Virtual Series
      Retirement Income Conference
    • New Outlook on Income: A Framework for Evaluating DC Retirement Income Solutions
      Investing in infrastructure at the right price
      Time for Action: Shifting Pension Dynamics from a Macro and Regulatory Relief Perspective
      Understanding the PEP Evolution
  • Careers
  • Research Center
MENU
Breadcrumb
  1. Home
  2. MONEY MANAGEMENT
August 04, 2014 01:00 AM

Publicly traded managers' growth propelled by a rising stock market

Active domestic equity flows remain weak as passive, alternatives gain

  • Tweet
  • Share
  • Share
  • Email
  • More
    Reprints Print
    Christopher Shutler expects flows will continue to be choppy within the money management industry.

    Most publicly traded money managers reported higher earnings in the second quarter, as rising equity markets increased overall assets.

    Still, net inflows into active U.S. equity strategies were tepid.

    “If you look at broad industry data, one of the things that jumps out is that despite the fact that equities are setting records, flows to equity strategies have been kind of crummy,“ said analyst Robert Lee, a managing director at Keefe, Bruyette & Woods Inc. in New York, who follows publicly traded money managers.

    Mr. Lee and other analysts said the concern among investors is whether the day is coming soon when the market changes course from its upward momentum. But weak flows, particularly into active domestic equity strategies, are part of a longer-term trend toward investments in alternatives, as well as into lower-fee passive strategies and exchange-traded funds, they said.

    “This is a trend that has been going on for several years,” said Christopher Shutler, an analyst with William Blair & Co. in Chicago.

    The trends could create longer-term problems for managers with large active equity franchises, said Morningstar Inc. analyst Greggory Warren, pointing to San Mateo, Calif.-based Franklin Resources Inc., whose institutional investment arm is Franklin Templeton Investments.

    Franklin's net income rose 3% to $578.9 million for the three months ended June 30, and was up 5% from the quarter ended June 30, 2013, company data show. The rising stock market saw Franklin's total equity AUM rise to $388.3 billion, up 4% from the previous quarter and up 24% from June 30, 2013.

    Outflows at Franklin

    But Franklin's global equity mutual funds and strategies experienced net withdrawals of $1.2 billion in the second quarter; domestic equity strategies saw net outflows of $600 million. In the first quarter, its global equity portfolios had net outflows of $1.2 billion; domestic strategies, however, had net inflows of $2.6 billion.

    The company has 42% of its assets in equities, its largest asset concentration, and CEO Greg Johnson said in a July 30 earnings call that “clearly, passive has been a force that's removed the flows ... from active managers.”

    Mr. Johnson attributed Franklin's outflows in the second quarter to three large institutional clients that decided to go passive. He did not name them, but Pensions & Investments reported on May 23 that the Nevada Public Employees' Retirement System had terminated Franklin Templeton, which had run about $770 million in international equities, because the pension fund was moving to a purely passive exposure to that asset class.


    See related story: Factor indexes are redefining alpha, MSCI exec maintains

    Baltimore-based money manager T. Rowe Price Group Inc. reported higher net earnings due to market gains in the second quarter, but again saw slight outflows due to redemptions.

    Net income was $305.8 million, up only 0.5% from the previous quarter but 23.4% above the second quarter of 2013. The company reported $738.4 billion in assets under management as of June 30, up 3.8% from the end of the first quarter and up 20.3% from a year earlier.

    But the company experienced net outflows of $200 million in the second quarter, compared with net inflows of $8.8 billion in the first.

    William Blair's Mr. Shutler said he expects choppiness in flows to continue at T. Rowe Price and the asset management industry as a whole. At T. Rowe, he said, institutional outflows are more likely than inflows in the next few quarters in aggregate as institutional investors appear less interested in both large-cap U.S. equities and fixed income, he said. That means international equities will have to pick up the slack.

    But Mr. Shutler said he remains bullish on T. Rowe Price's long-term prospects. He said the company is working methodically to build its international distribution capabilities. He said only 6.2 % of the firm's assets came from non-U.S. investors in the quarter. He also mentioned the firm's target-date fund business is strong, with net inflows of $16.4 billion over the year ended June 30.

    Net earnings and AUM also grew at Baltimore-based Legg Mason Inc., but active equity strategies and mutual funds reported outflows. Legg Mason reported $704.3 billion in assets under management as of June 30, up 0.4% from the end of the previous quarter and up 9% from a year earlier.

    One firm bucking the equity outflow trend was Affiliated Managers Group Inc., Beverly, Mass. AMG, the publicly traded holding company that acquires majority stakes in money managers, reported total net inflows of $6.9 billion in the second quarter, its 17th straight quarter of inflows.

    That number included $4.6 billion of institutional net inflows driven by global equities and alternative strategies and $1.9 billion in mutual fund net inflows focused on global equity and emerging market equities, William Blair's Mr. Shutler said in a report.

    Keefe, Bruyette & Woods' Mr. Lee said AMG has been able to drive inflows with consistently strong performance from its boutique affiliates.

    He said the company, which added four affiliates this year, has had a solid track record of buying into money management firms that have been able to maintain their strong performance post-acquisition.

    'Most surprising trend'

    On another topic, Morningstar's Mr. Warren said the “most surprising trend” has been some managers seeing net inflows in fixed income, “despite this huge talk of a big rotation from fixed income.” Franklin Resources, Legg Mason and BlackRock Inc. all experienced net inflows in fixed income during the second quarter.

    Mr. Warren said net inflows into fixed income were, in general, not in core fixed income but in alternative strategies including unconstrained bonds and high yield.

    BlackRock Inc., the world's largest money manager, produced strong net inflows of $30.4 billion into its iShares ETF division and $9.5 billion into fixed income

    BlackRock's AUM grew to $4.59 trillion in the quarter, up 4% from the previous quarter and up 19% from the year-ago quarter. That helped BlackRock achieve a quarterly profit of $808 million in the second quarter, up 11% from the same quarter in 2013.

    But on the institutional front, BlackRock saw net outflows from active equity strategies of $4.5 billion and $7.9 billion from equity index strategies, a key sign that institutional investors are particularly concerned about the stock market, analysts said.

    Assets under management for publicly traded money managers as of June 30, 2014. Dollar amounts are in billions.
    ManagerAssetsChange from Q1Change from 2Q 2013Net inflows
    BlackRock $4,593.64.4%19.1%$38.0
    State Street $2,480.04.2%15.6%$18.0
    J.P. Morgan $1,707.03.6%16.1%$23.0
    BNY Mellon $1,636.01.0%14.6%-$13.0
    Goldman Sachs $1,007.05.3%18.6%$36.0
    Northern Trust $924.41.0%15.1%n/a
    Franklin Resources $920.54.0%13.0%$2.6
    Invesco $802.41.9%13.7%-$8.8
    T. Rowe Price $738.43.8%20.3%-$0.2
    Legg Mason $704.30.4%9.3%$0.7
    Affiliated Managers Group $606.89.0%29.2%$6.9
    AllianceBernstein $480.25.7%10.5%$8.3
    Morgan Stanley $396.03.7%14.1%$7.6
    Federated Investors $351.6-4.0%-3.0%$0.7
    Janus $177.72.1%10.6%-$3.3
    Artisan Partners$112.04.3%30.5%$3.9
    Source: Company reports

    Compare fund flows and AUM of publicly traded money managers with P&I's Earnings Tracker

    Related Articles
    Publicly traded money managers benefit from strong equity markets
    Investment managers report lackluster quarter
    Manager assets up in Q2 2014
    Factor indexes are redefining alpha, MSCI exec maintains
    Factor indexes are redefining alpha, MSCI exec maintains
    Moody's: Market gains lead to positive growth for pure-play managers
    Weak equity returns sting managers
    Moody's: BlackRock dominates public managers in AUM growth, inflows in fourth q…
    Casey Quirk: Global public money managers see 13% revenue growth in 2014
    Recommended for You
    First Eagle gives wing to small-cap equity team with liftout from Royce
    First Eagle gives wing to small-cap equity team with liftout from Royce
    Putnam Investments names head of global institutional management
    Putnam Investments names head of global institutional management
    HSBC Asset Management selects next global head of institutional business
    HSBC Asset Management selects next global head of institutional business
    Innovations in DC: Helping Supercharge Retirement Outcomes
    Sponsored Content: Innovations in DC: Helping Supercharge Retirement Outcomes
    sponsored
    Events
     
     
    Sponsored
    White Papers
    Bipsync Client Stories: RMS in Action at Pensions and Superannuation Funds
    COVID-19 Makes LP Portfolio Management More Important Than Ever
    China: the outlook is bright for longer-term investors
    Finding Differentiation in Securitized Assets
    Green and sustainable bonds in emerging markets
    Portfolio Protection: One Size Fits None
    View More
    Sponsored Content
    Partner Content
    The Industrialization of ESG Investment
    For institutional investors, ETFs can make meeting liquidity needs easier
    Gold: the most effective commodity investment
    2021 Investment Outlook | Investing Beyond the Pandemic: A Reset for Portfolios
    Ten ways retirement plan professionals add value to plan sponsors
    Gold: an efficient hedge
    View More
    E-MAIL NEWSLETTERS

    Sign up and get the best of News delivered straight to your email inbox, free of charge. Choose your news – we will deliver.

    Subscribe Today
    April 5, 2021 Page One

    Get access to the news, research and analysis of events affecting the retirement and institutional money management businesses from a worldwide network of reporters and editors.

    Subscribe
    Connect With Us
    • RSS
    • Twitter
    • Facebook
    • LinkedIn

    Our Mission

    To consistently deliver news, research and analysis to the executives who manage the flow of funds in the institutional investment market.

    pilogo-NEW
    About Us

    Main Office
    685 Third Avenue
    Tenth Floor
    New York, NY 10017-4036

    Chicago Office
    150 N. Michigan Ave.
    Chicago, IL 60601

    Contact Us

    Careers at Crain

    About Pensions & Investments

     

    Advertising
    • Media Kit
    • P&I Content Solutions
    • P&I Careers | Post a Job
    • Reprints & Permissions
    Resources
    • Subscribe
    • Newsletters
    • FAQ
    • P&I Research Center
    • Site map
    • Staff Directory
    Legal
    • Privacy Policy
    • Terms and Conditions
    • Privacy Request
    Pensions & Investments
    Copyright © 1996-2021. Crain Communications, Inc. All Rights Reserved.
    • NEWS
      • Asset owners and the coronavirus
      • Alternatives
      • Consultants
      • Coronavirus
      • Defined Contribution
      • ESG
      • Frontlines
      • Hedge Funds
      • Investing / Portfolio Strategies
      • Money Management
      • Pension Funds
      • People Moves
      • Private Equity
      • Real Estate
      • Searches & Hires News
      • SECURE Act
      • Special Reports
      • WorldPensionSummit
    • Data
      • Research Center
      • Searches & Hires Database
      • Searches & Hires News
      • RFPs
      • Charts / Infographics
      • Sponsored Research
      • Trackers
    • Insights
      • Opinion
      • White Papers
      • Industry Voices
      • Letters to the Editor
      • Partner Content
      • Publisher's Update
    • Multimedia
      • Videos
      • Webinars
      • Polls
      • Slideshows
      • Charts / Infographics
    • Events
      • Conferences
      • Webinars
    • Careers
    • Research Center