Market volatility severely curtailed revenue growth among asset managers in 2011, while independent managers continued to outperform management subsidiaries, according to a study released by consulting firm Casey, Quirk & Associates LLC.
The firm analyzed profit metrics from 21 publicly traded U.S.-based asset managers, as well as asset management subsidiaries of 12 quoted U.S. financial institutions.
Median annual revenue growth among the 33 firms analyzed rose only 8 percent in 2011 according to the study, compared with the 22 percent increase in 2010, reflecting volatile capital markets.
Meanwhile, listed investment firms continued to outperform the asset management subsidiaries to the tune of median profitability of 35 percent last year, compared to 25 percent for subsidiaries, and revenues of 15 percent during 2011, compared to similar metrics of six percent for subsidiaries.
Consistently growing and profitable asset managers among the quoted sample include firms with strong investment leadership, a wide range of innovative products, efficient retail distribution and a global client base, said Jeb B. Doggett, a Casey Quirk partner, adding that specialist firms emphasizing a single investment or distribution skill also perform well.
“Independent asset managers, whether publicly traded or employee-owned, usually generate stronger cash flow than subsidiaries of larger financial firms,” he said. “Because independent firms often can offer to share the asset management economics more directly with their employees, they can compete more aggressively for key industry talent.”