A rising stock market and talk of merger and acquisition activity are driving up the share prices of many publicly traded mutual fund companies.
According to a report from The Financial Times, it hasn't been terribly tough for managers to beat this S&P 500 this year, which is up 8%, and as a result firms are making a strong showing on Wall Street.
But the gains are also due to talk of industry consolidation. For instance, shares of Baltimore-based Legg Mason, which took over Citibank's asset management division last year, are up 76%. The stock of Denver asset manager Janus Capital Group, which in recent months has demonstrated robust signs of recovery from the mutual fund scandal, has risen by 50%. Affiliated Managers Group in Boston, which invests in asset managers, has risen by 40%.
And while some of the industry's biggest firms - including American Funds, Vanguard Group and Fidelity Investments - are privately owned, the trend to profitability and higher margins seems apparent, The Times said.
For example, Baltimore-based T. Rowe Price, whose shares are up by a third in the past year, on Friday reported record fourth quarter results. Its net income rose to $117 million, 20% higher than a year earlier, and assets under management rose by 15% to a record $270 billion. Shares of Franklin Resources are up more than 50% this past year, and on Thursday the San Mateo, Calif., firm reported a 32% rise in net income for its December quarter, to $318 million.
Speculation now is a potential merger between Morgan Stanley's asset management business and New York-based BlackRock, the fixed income manager. BlackRock's share has risen by almost 70% in the past year.
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.