Although the stock market took a serious downturn in the second quarter, publicly traded money management firms are still expected to post healthy second-quarter returns, principally because average assets under management did not fall too much in the period, The Wall Street Journal reports. But should the stock market continue to decline, revenues will fall.
"If you look at [the second] quarter, there's just no place to hide," said Rachel Barnard, an analyst with Morningstar. "Stocks, bonds, real estate - everything has just had a bad quarter. The good news for asset managers is that that doesn't filter into earnings right away because revenues are based on average assets under management."
Firms that the Street will be paying particular attention to include BlackRock, following its acquisition of Merrill Lynch Investment Managers in exchange for a 49.8% stake in BlackRock; Legg Mason, whose fiscal fourth quarter earnings ended in May fell short of analyst expectations; Janus Capital Group, which continues to work to end mutual fund outflows; and T. Rowe Price, which is now using new accounting standards to record stock-options expensing.
The staff of Money Management Executive ("MME") 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 MME, and have not prepared, sponsored, endorsed, or approved these summaries.