Public Asset Managers Just Had Their Best Quarter Ever. But It Wasn’t All Good News.

Fund managers have shattered records for both revenue and managed assets amid the pandemic, but the gap between best and worst got bigger.

Jeenah Moon/Bloomberg

Jeenah Moon/Bloomberg

Publicly traded traditional asset managers notched their strongest quarter ever between July and September, even as the coronavirus pandemic continued to shut down big sectors of the economy, according to Casey Quirk, the asset management strategy consultant that is part of Deloitte.

Public managers hit new highs for both revenue and assets under management between July and September 2020. That performance is in line with public markets, which recovered much of their losses since the lows in March.

Casey Quirk, which analyzed 23 asset managers that were not a part of larger corporations such as banks or insurance companies, found that aggregate revenue increased 1.85 percent and assets increased 2.7 percent compared with the fourth quarter of 2019. Last year’s final quarter was the previous high for the group, which represented firms in the U.S., Canada, and continental Europe.

But the difference between the best and the worst in the industry widened and quickened between July and September, according to Amanda Walters, a principal at Casey Quirk.

“The spread between winning and laggard firms from a revenue growth and profit standpoint has widened, even though the medians aren’t that different quarter over quarter,” said Walters in a phone interview. “The larger, more diversified firms tend to be getting bigger. They have strategic partnerships, trusted brands, and a wide range of capabilities. All that leads to greater asset concentration among a smaller number of firms.”


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Much of the difference in experiences among firms this year has been driven by fees coming down during the pandemic, even after years of declines in prices for managing assets. Investors quickly moved much of their money over the period into low-cost passive funds, or less risky money market and bond funds. For traditional managers, active stock funds are the most profitable to run. Fees for the median manager declined 2.4 percent for the quarter.

Walters said the implied fee level at some firms actually went up, indicating they were able to attract investors to unique, higher-fee strategies, such as concentrated equity, multi-asset solutions, or even alternative investments. That helped firms avoid painful discounting.

Revenue grew for the group in total during the first nine months of 2020. The top quartile of firms increased their revenue 6.8 percent, while revenue for those in the bottom quartile declined 11.5 percent, reported Casey Quirk.

Margins for the asset management industry are among the richest of any sector. The median asset managers’ margins for the quarter came in at 31.6 percent. Again, the difference between the top and the bottom was stark. Firms in the top 25 percent had margins of 39.8 percent, while the bottom quartile managers had 26.7 percent margins.

Costs declined in the third quarter, mostly because of employees working from home. Total operating expense fell 2.9 percent, according to the consultant. Costs outside of compensation declined 10 percent, because of less travel, entertainment, sales, and marketing expenses. Compensation for employees dropped a nominal 1.9 percent.

“Cost is an interesting component of this story because a lot of the cost savings was driven by the fact that we’re in a new environment,” said Walters. “People aren’t going to conferences or traveling to see clients. It’s a small component of the overall cost basis, but 100 percent of firms aren’t incurring these costs. The big question, of course, is will it revert once things get back to normal?”

According to other statistics that Casey Quirk collects on assets managers, the cost savings is not yet coming from shedding real estate.