Mr. Temple said he does not expect large transactions like the Amundi-Pioneer and Janus-Henderson deals in 2017 because it would be hard to duplicate the complementary nature found in both consolidations.
“There are very little duplications among investment teams,” he said. “There are not many areas that overlap. There is very little loss of clients expected.”
He said Milan-based Pioneer's presence in Australia, Germany, Italy and the U.S. will complement Amundi's presence in France, Spain and Asia.
In the Janus-Henderson deal, Mr. Temple said Janus' strengths in U.S. equities and U.S. fixed income will complement Henderson's strengths in global and European equities and fixed income and its alternatives savvy in the U.K. and Europe.
Mr. Temple said most other large managers could not do such a consolidation effectively. An example he cited was a large money manager like Franklin Resources Inc., with $714.4 billion in assets under management, which has struggled with net outflows the past several years.
“A merger could result in a cost saving, but it can also result in a huge client loss as well because of a huge investment team overlap between the acquired entity and Franklin,“ he said. “Franklin already has a investment teams in almost every strategy you can think of, so it could be very difficult for them to find a manager that they can combine with.”
More likely, he said, are smaller consolidations, such as Virtus Investment Partners Inc.'s $573 million purchase of RidgeWorth Investments, announced in December. Mr. Temple said Virtus won't tamper with RidgeWorth's multiboutique structure, so the risk of client defections should be minimal.
Another major deal in the U.S. was State Street Corp.'s purchase of active manager GE Asset Management for $485 million. The deal, which was announced in May, closed in July.
In terms of investment management, the firm's State Street Global Advisors subsidiary was mainly known for its passive strategies and its ETF franchise.
While most of GEAM's approximately $100 billion in assets under management were for General Electric Co.-related benefit plans, Mr. Temple said the deal allows SSgA to offer a broader range of investment options, including cross-selling existing clients strategies in alternatives, and active fundamental equity and fixed income.
There will be more deals ahead in 2017 for active equity managers, believes Elizabeth Bloomer Nesvold, managing partner of New York-based investment bank Silver Lane Advisors LLC.
Ms. Nesvold said she started getting calls about six months ago from foreign buyers such as banks and asset management firms interested in M&A deals involving firms specializing in U.S. active equity strategies. Interest has picked up since the November election, she said.
Investment managers focused on active equity strategies had been “unloved,” she said because it was difficult for them to beat passive strategies because market correlation has been high across many, if not most, equity sectors in recent years.
“Since the election, we have seen more diffusion in terms of stock market returns and that creates opportunities for active managers,” she said.