Growth in assets under management and revenue slowed and net flows weakened among U.S. money managers in the third quarter, said a new report from Moody's Investors Service.
As of Sept. 30, among the 14 publicly traded money managers surveyed representing $12.7 trillion, year-over-year AUM was up 6.5%, the report said, the slowest annual growth since the second quarter of 2016. Excludng BlackRock, the year-over-year AUM (at $6.3 trillion) increased just 5.2% from Sept. 30, 2017, the report said.
Revenues, meanwhile, were up 5.3% year-over-year (3.3% excluding BlackRock), below the revenue growth of the overall S&P 500 companies of 8.3% but in line with the rest of the financial sector. The slow growth, the report stated, reflects continuing pressure on performance fees as managers continue to lower them. Total fee rates were down 6% from Sept. 30, 2017, while BlackRock's fees were down 9%. Excluding BlackRock, fees were still down 2.8% for the year, the report said.
Net flows also weakened, and for the second consecutive quarter, for the 14 money managers surveyed. Net outflows were $21.5 billion (and $32.1 billion excluding BlackRock).
Moody's added that its outlook for 90% of its rated global money managers remains stable, while 5% each of money managers have a positive or negative outlook. Money managers "are resilient under our stress scenarios" and "we do not expect to see significant downgrades in the short-to-intermediate term," the report said.
The surveyed money managers were BlackRock ($6.4 trillion in AUM as of Sept. 30), T. Rowe Price Group ($1.1 trillion), Invesco ($981 billion), Affiliated Managers Group ($830 billion), Legg Mason ($755 billion), Franklin Resources ($717 billion), AllianceBernstein ($550 billion), Federated Investors ($437 billion), Janus Henderson Group ($378 billion), OM Asset Management ($238 billion), Virtus Investment Partners ($106 billion), Waddell & Reed Financial ($80 billion), Cohen & Steers ($60 billion) and GAMCO Investors ($41 billion).