The largest publicly traded money managers depended on inflows for growth in the fourth quarter, as market returns grew tepid amid uncertainty over the presidential election and negotiations to avert the fiscal cliff.
“There wasn't a lot of market lift, but there was some,” Robert Lee, New York-based analyst at Keefe, Bruyette & Woods Inc., said in an interview. Among indexes:
cThe Standard & Poor's 500 stock index returned -0.38% for the three months ended Dec. 31, while the Russell 3000 index was up a meager 0.24%;
cThe Morgan Stanley Capital International Europe Australasia Far East Index gained 6.6%; and
cThe Barclays Capital Aggregate Bond index rose a scant 0.21%.
Still, publicly traded money managers who as of Feb. 1 had reported their fourth-quarter earnings and assets under management didn't see a major decline in assets — in fact, they generally saw slight gains.
Mr. Lee added, “There was modest asset growth and some organic growth.
“For all the angst in the quarter, it was mildly positive. You didn't see those big, huge swings. October and November weren't so great, but December was better. Considering all the headlines, things kind of held in there relatively well.”
Exchange-traded funds were the main contributors to two of the three firms with the largest net inflows.
BlackRock Inc., the world's largest money manager,led the way, with overall net inflows of more than $47 billion. That total reflected inflows of $31.2 billion to equity, $12.4 billion to fixed income and $4.1 billion to multiasset strategies, the firm said in its earnings statement. Alternatives strategies had net outflows of $700 million.
Daniel Fannon, equity analyst at Jefferies & Co., New York, said in a client note that BlackRock ETFs took in $40 billion in the quarter, mostly in equities, while institutional fixed-income index products brought in another $8 billion.
Assets in BlackRock's iShares ETF business totaled $752.7 billion in the latest quarter, up 6.6% from the third quarter and 26% above a year earlier.
BlackRock's total assets in the quarter reached a record $3.792 trillion, up 3% from the prior quarter and 8% higher than the end of 2011.
State Street Global Advisors, which was third in total net inflows with $24 billion, had $13 billion of inflows to the firm's ETFs, Joseph “Jay” Hooley, chairman, president and CEO of parent State Street Corp., said in an earnings conference call Jan. 18.
SSgA had $2.089 trillion in AUM as of Dec. 31, up 1.2% from three months earlier and 13.2% higher than the end of the previous year.
J.P. Morgan Chase & Co. reported asset management net inflows of $32 billion, including $24 billion in liquidity strategies, ranking it second in the quarter. Those inflows helped bring its total AUM to $1.426 trillion as of Dec. 31, up 1.3% from the prior quarter and a 7% increase from a year earlier.