Stocks may be back up, but revenue is down at publicly traded asset managers, according to analysis by Casey Quirk.
The Deloitte-owned asset management consultant reported that median revenue fell 6.4 percent in the second quarter among listed traditional asset management firms. Compared with this time last year, median revenue slid 7.1 percent.
According to Casey Quirk, this decline was driven in part by investors moving assets to cheaper bond and cash funds amid continued uncertainty about how the Covid-19 pandemic would impact the economy. Fee discounting also contributed, with average realized fees declining 2.2 percent in the second quarter and 3.7 percent year-over-year.
“Capital markets are mostly returning to pre-pandemic crisis levels, yet asset manager financials are still feeling the impact from the brief and severe slump earlier in 2020,” the consulting firm said in a statement Monday.
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Operating margins also continued a “a mostly downward trend” for listed asset managers, according to Casey Quirk. The consultant reported that median margins in the second quarter were 27 percent, compared with 29 percent in 2019.
Total assets under management actually increased among the 19 publicly-traded firms tracked by Casey Quirk, growing 12 percent from March 31 to June 30. However, assets were down 4.4 percent compared with last year, and median flows were down 0.6 percent year-over-year.
“Large, diversified publicly traded managers are faring the best, while firms dependent on specific asset classes and client segments produced more mixed results,” Casey Quirk principal Amanda Walters said in a statement.
She added that multi-affiliate firms are under the most pressure due to “complex cost structures” and mixed performance among those affiliates.
“Continued market uncertainty because of the pandemic and underlying financial trends brings into sharp focus the growing gap between asset managers that are willing to challenge their legacy businesses and those hoping higher market levels will bail them out of current difficulties,” Walters said.
