Franklin Resources, Janus Capital and T. Rowe Price all got neutral ratings from UBS Warburg analyst Glenn Schorr, as he began covering the investment management sector, The Wall Street Journal reports. Schorr gave the overall sector a neutral rating, as well.
The analysts reason for pessimism in the short term includes heightened competition in a saturated market, the rising power of distributors and little ability to cut expenses, heightened regulatory scrutiny and "alternative products that are more risk than opportunity."
He also said that brokerage firms have proven better able to cut expenses than asset managers during the bear market.
But favorable demographic trends throughout the world hold out promise for the sector, said Schorr. He also said substantial cash flow and strong return on equities make the fund sector' long-term outlook more positive.
As to specific strengths in the three companies he is now tracking, Schorr said Janus new management team is "making all the right moves," T. Rowe Price boasts a strong brand and has a broad product mix, and Franklin Resources is "fairly valued."
The staff of Mutual Fund Market News ("MFMN") has prepared these capsule summaries based on reports published by the news sources to which they are attributed. Those news sources are not associated with MFMN, and have not prepared, sponsored, endorsed, or approved these summaries.