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Money managers cool as rest of markets re-heat

The share price of the 25 largest money managers fell on average 2.05% over the five-day period ended Oct. 2. Weighted by market cap, the group fell 1.9%. T. Rowe Price, Legg Mason (LM), AllianceBernstein (AB) and Invesco (IVZ) were the only members of the group to manage a positive return over the period, with Invesco barely making it over the break-even mark. The declines may be attributed to investor concern that equity market volatility will negatively impact money manager returns and that equity markets are overheated as the indexes have resumed their ever-upward ascent after an eight-month hiatus.

What made the declines notable was that both the S&P 500 index and the Dow Jones industrial average continued to push ever higher. The former was up 0.27% over the one-week period, while the latter gained 1.06% and closed in on 27,000. In what has been a volatile year in comparison to the 18 or so months preceding it. The S&P and the Dow are up 9.3% and 8.3% in 2018 while the asset managers are overall in negative territory.

The disparity in year-to-date returns between the equal-weighted index and the cap-weighted index is largely driven by the performance of J.P. Morgan. The more diversified company makes up about 40% of the total market cap across the group and is up 6.6% for the year despite falling 2.1% in the past week. The next largest company, BlackRock (BLK), is down 7.1% so far in 2018.