Volatile markets have pummeled traditional money managers, with Janus Henderson Group being the latest firm to report assets dropping amid disappointing performance.
Assets under management fell to $328.5 billion in the fourth quarter, down 13 percent from the previous three months as investors withdrew a net $8.4 billion, according to Janus’s earnings statement Tuesday. The redemptions brought total outflows last year to $18 billion.
Dick Weil, chief executive officer of Janus, called the outflows “disappointing,” blaming the active manager’s woes on market volatility and “ongoing change” in asset management. “We faced the same global market challenges and headwinds as the wider industry,” he said in the statement.
Traditional asset managers have struggled through the tumult, while alternative investment firms have continued attracting capital from investors seeking bigger gains in private markets. Blackstone Group, the world’s largest private equity firm, reported its second-highest gross inflows ever in the fourth quarter, according to remarks made by CEO Steve Schwarzman during the firm’s earnings call with investors last week.
Janus’s biggest outflows and market losses last year were from equities, its earnings report shows. The firm lost $13.7 billion in equities in 2018, compared with a $4.4 billion loss for fixed income.
High-profile fixed-income manager Bill Gross is leaving Janus on March 1 to focus on managing his charitable foundation in retirement. Janus announced his departure on February 4, saying his responsibilities will be handed over to the firm’s global macro fixed-income team.
Janus’s fixed-income assets fell 9.6 percent last year, to $72.4 billion, the firm’s earnings report shows. The fixed-income group faced redemptions every quarter last year, with outflows totaling $24.8 billion in 2018.
Other traditional investment managers have pointed to recent market turbulence in announcing tumbling assets.
“Legg Mason’s quarterly results were negatively impacted by the industry’s record net outflows from actively-managed U.S. mutual funds, as well as double-digit equity market losses,” Joseph Sullivan, the firm’s chairman and CEO, said in its fourth-quarter earnings statement on February 4.
Legg Mason had $8.5 billion of outflows in the fourth quarter, with assets dropping about five percent last year, to $727 billon.
State Street Corp., which reported a steeper drop in assets last year, announced in January that it was laying off 1,500 employees. BlackRock also announced last month that it was cutting staff to help navigate difficult market conditions.
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In a report released about three months ago, JPMorgan Chase & Co. predicted that capital would keep flooding into alternative investments such as private equity. There’s a “paucity” of returns in traditional investments, the bank’s asset management unit said in the report.
Blackstone’s total assets increased nine percent last year, to $472 billion, including a 24 percent jump in private equity assets. The firm said its corporate private equity group produced a gross 19.1 percent gain in 2018, outperforming its other units.
Apollo Global Management also finished 2018 with a bigger pool of assets under management, after notching $60 billion of inflows, according to its earnings report last week. The alternative investment firm said total assets rose 13 percent last year, to $280 billion.
