Market performance gave money managers' assets under management a boost in the third quarter, ultimately driving revenues higher, despite mixed asset flows, said a report released by Moody's Investors Service on publicly traded managers.
BlackRock's AUM increased 4.6% for the quarter, outstripping the combined 1.9% increase of the AUM of the other managers Moody's reviewed. Long-term AUM of the managers increased by an average of 3.6%.
Only 10% of the overall increase of long-term AUM was attributable to net flows, the report said. In net flow performance, the use of passive accelerated, led by BlackRock's net inflows of $51.3 billion into its iShares exchange-traded funds business. However, active manager performance and organic growth improved. Nine of the 13 managers had sequential flow improvements, the report said.
Four managers' AUM — Invesco, T. Rowe Price, BlackRock and Affiliated Managers Group — increased more than 3.5% during the quarter. Invesco's increase of 5.2% was boosted by its $6.5 billion win of assets to be managed for Rhode Island's 529 plan, previously held by AllianceBernstein. T. Rowe Price's increase of 4.7% was spread evenly across mutual funds (up 3.4%) and other portfolios (up 3.6%).
BlackRock benefited from a recovery of flows into iShares, which had an 8% increase in AUM. AMG continues to benefit from organic growth and good investment outperformance. AUM was up 3.8%, nearly a quarter of which was derived from net flows.
Revenues increased 1.4% across all managers in the quarter to $10.6 billion, and base management fees were up 2.5%. Across the surveyed group, revenues generated from performance fees are roughly half the level of the comparable year-earlier period.
An aggregate decline in effective fee rates was driven by the largest managers, including BlackRock and Invesco, which have growing passive operations and are exposed to the influence of a strengthening dollar. But on an individual basis, eight managers increased effective fee rates during the quarter, consistent with a rally in higher-fee equity assets.