Listed asset managers saw surges in revenue and asset under management in the second quarter, according to Casey Quirk.
The combined revenue of the 27 publicly traded managers analyzed by the asset management consultant jumped by 34.2 percent from a year earlier. Their total AUM reached $32 trillion in the second quarter, rising 5.5 percent year-over-year.
Private market managers have outperformed their public market peers due to fewer fee pressures, according to Casey Quirk, which is part of Deloitte. The median operating margin in the second quarter was 42 percent for private market managers, compared to 29 percent for the traditional firms focusing on public stocks and bonds.
Private asset managers are less sensitive to fee pressure because their clients don’t have low-cost substitutes, said Scott Gockowski, senior manager at Casey Quirk. Passive investment products like exchange-traded funds gained more popularity during the pandemic, pressing asset managers trading in the public markets to lower their costs.
“But if you want to invest in a private company, there is really nowhere else to go,” Gockowski said.
Gockowski estimated that 2021 would be the busiest year since 2009 for merger and acquisition activities in the asset management industry. The rapid shift to remote work has fueled asset manager interest in technology investment, and firms are looking to grow more business lines in that sector, he said.
Looking forward, Gockowski thinks the positive market momentum in the asset management industry could last even as the delta variant hits the economy. “The delta variant is both a blessing and a curse, because I think firms saved a lot of money in the pandemic,” he said. “In terms of their travel and expense budgets, there were way less sales and marketing meetings.”
While he said investors are watching the Federal Reserve closely, he noted that most allocators are adopting a “relatively risk-on position” at this stage of the pandemic recovery.
“So they are getting out of cash and getting into asset management,” he said. “I think that’s good for the industry.”