Asset increases are no longer enough to raise the share prices of publicly traded financial services firms with traditional money management units.
That was borne out by those firms' share prices that fell from Oct. 12-31 — the period when most reported third-quarter assets under management that averaged a 1.48% increase from the end of the second quarter. In fact, during the nine-day trading period from Oct. 12-24, share prices of some of the largest financial services firms took a significant hit, only to rebound somewhat by month's end.
"What is true about the market hit (on share prices) is that historically, the industry just focused on asset growth," said Amanda Walters, senior manager at consulting firm Casey Quirk, a practice of Deloitte Consulting LLP, New York.
"We're seeing a lot of CEOs now focusing on profitability rather than just asset growth" in their earnings conference calls with analysts. "They'll always focus on assets under management and investment performance, but that's the legacy part of the industry. Now it's a focus on revenues, fees and profits," she said.
State Street Corp., Boston, took the biggest hit to its stock value from Oct. 12 through the end of the month, down 15.9% to $68.75 — this despite its State Street Global Advisors money management unit reporting third-quarter AUM increasing 3.2% to $2.81 trillion.
But other large managers saw share value declines as well:
BlackRock Inc., down 1.5% to $411.42 — rebounding from a 9.3% drop from Oct. 12-24 — despite a 2.3% AUM jump to $6.44 trillion.
Voya Investment Management, down 7.4% to $43.76, compared to an 11.4% decline Oct. 12-24, while assets increased 2.3% to $298.1 billion.
Bank of New York Mellon Corp, down 3.8% to $47.33 — also bouncing back from a 7.8% drop Oct. 12-24 — while assets rose 1.3% to $1.83 trillion.
Overall from Oct. 12-31, the S&P 1500 Asset Management and Custody Bank index fell 4%, while the Dow Jones U.S. Asset Managers index was down 3.97%. The S&P 500 total stock index, despite losing 6.84% for the full month only slipped 0.56% from Oct. 12-31, while the Dow Jones U.S. Total Stock Market index, which fell 7.5% for the month edged down 0.77% from Oct. 12-31.