- Asset managers demonstrated strong revenue growth over the past 12 months, with 28 out of 30 covered firms in the FUSE Public Asset Manager Report generating revenue at a more rapid pace than expenses. Despite the market decline that began at the onset of the year and a rapid deterioration of broad economic conditions, the market rally in March 2022 likely helped blunt the impact and kept the rolling revenue growth rate elevated.
- Investment management fees are the primary revenue stream for asset managers, while compensating employees for the management of funds primarily constitutes operating expenses. While market appreciation is one factor that helps drive higher revenue from advisory fees, flows are also critical. Franklin and T. Rowe Price announced acquisitions in the past 12 months, each targeting an alternative shop. Flows into Alternative products have been consistent and positive thus far in 2022, a money-making bonanza that asset managers have not hesitated to capitalize on.
- Asset management may very soon begin to face compression in their revenue and expense growth rates as bonus pools and AUM come down amid continued economic uncertainty, credit tightening, and new regulatory hurdles in business lines.
12 Month Revenue and Expense Growth
Source: Company Filings