Fuse Blog

Industry Profit Margins Dropped

  • Profit margins at 29 publicly traded asset managers tracked by FUSE, and a proxy for the industry at large, dropped in 4Q22. On a rolling 12-month basis, operating profit margins declined to an average of 29.0% from 34.8% in 4Q21.
  • Margins were squeezed by the dip in assets under management caused mostly by the tumble in equity and fixed-income markets. Asset managers were not able to reduce expenses quickly enough to offset the lower revenues; 48% of public companies actually had higher costs in 4Q22, while 86% had lower revenues.
  • Several firms have announced cost-savings programs, including reductions in headcount and pauses in non-essential hiring. Given the industry is accustomed to profit margins above 30%, asset managers may turn to further cost cutting in the absence of a new bull market.

Rolling 12-Month Avg. Operating Profit Margin

3.28.23 Blog 2

Source: FUSE, Company reports