Corporate Valuation, Investment Management

May 1, 2017

Q1 Shows Glimmer of Hope for Active Managers and Continued Gains for Trust Banks

This quarter’s newsletter focuses on the mutual fund sector, which has been plagued by asset outflows into ETFs and other passive strategies for most of the last decade.  The first two months of this year do, however, offer a ray of hope as 45% of U.S. based active managers beat their relevant benchmark, resulting in February being the first month of inflows into active products since April 2015.

The newsletter also reviews RIA performance over the last year by size and type of asset manager.  Unsurprisingly, trust banks have outperformed their peers with the prospect of higher interest rates and reinvestment income.  On the size front, publicly traded asset managers with less than $10 billion in AUM were bested by their larger counterparts, but this is primarily attributable to the undiversified nature of this index (two components, both of which are thinly traded) and in no way suggestive of some broader trend of client preferences for larger RIAs.

The M&A outlook remains fairly robust as owner demographics and the maturation of the mutual fund industry spur consolidation and buying opportunities for those looking to add scale.  Standard Life’s $4.6 billion purchase of Aberdeen Asset Management last month is a perfect example of this and may be indicative of future deal-making in the sector.

You can read the newsletter below or download it here.

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