AUM, Flows And Revenue Fall But Margins Remain Flat

Dec 03, 2015, 08:00 ET from kasina

NEW YORK, Dec. 3, 2015 /PRNewswire/ -- kasina, a DST company providing data-driven insights and distribution solutions to financial companies around the world, today released its third quarter 2015 Asset Manager Composite results.

Concerns over slowing economic growth in most developed markets, declining corporate margins, and continued negative emerging market sentiment (particularly with regard to China), resulted in sharp declines in equity, commodity and most fixed income returns in Q3 2015. As shown in the exhibit below, these factors led to lower Assets Under Management ("AUM") and revenue for the majority of the 16 firms in the kasina Asset Manager Composite in Q3 2015. In addition, 12 firms also saw negative net flows over the most recent quarter, which further contributed to these firms' challenged results. 

COMPOSITE AUM & REVENUE: Q3 2015 VS. Q2 2015


AUM

Revenue

No. of firms reporting decline

13

10

Industry AUM decline

$565.5 billion

$349.6 billion

Industry % decline

5.6%

3.1%

   Note: 16 firms in kasina composite



   Source: Company reports



Nevertheless, operating margins remained relatively flat from the prior quarter at 34.8% on a weighted basis, versus 34.9% in Q2 2015 on a weighted basis, and increased slightly on a simple average to 32.9% from 32.7%. The contrast between falling assets, decreased revenue, negative net flows, and relatively flat margins can be primarily attributed to expense reductions, as 10 asset managers effectively cut distribution and compensation expenses over the period. The gradual reduction in assets over the quarter also minimized the negative impact on operating margins.

As an example, the AUM for Affiliated Managers Group dropped by over $48 billion from the prior quarter due to negative net flows of $5.5 billion and market depreciation of $42.7 billion, leading to a $33.5 million decline in operating revenue. Yet, operating margins actually increased to 35.1% in Q3 2015 from 30.2% in the prior quarter, on cost reductions of over $53 million. The firm with the best performance in the period was Pzena Investment, which saw a sequential increase of 795 basis points in operating margins to 52.7%, on positive asset flows, higher revenue, and lower operating expenses.             

OPERATING AND NET MARGINS FOR ASSET MANAGERS BY QUARTER

AUM and revenue fell sequentially for each of the wires, given the negative market returns in the quarter. Given the decline in revenue, average advisor productivity, also known as revenue productivity, fell to $1.01 million in Q3 2015, from $1.03 million, with Wells Fargo the only wirehouse that saw an increase in revenue productivity. However, like the asset managers, operating margins fell modestly to 22.2% in Q3 2015 from 22.4% in the prior quarter.

Note: kasina's asset management composite includes: BlackRock, Franklin Templeton, INVESCO, Legg Mason, T. Rowe Price, Affiliated Managers Group, Alliance Bernstein, Federated Investors, SEI, Janus Capital Group, Waddell & Reed, Artisan Partners, Cohen & Steers, GAMCO, Calamos, Pzena Investment Management

About kasina
kasina helps leading companies in the financial services industry manage data, gain insight, and ignite change in their business. A wholly-owned subsidiary of DST Systems, kasina enables companies to transform the way they grow market share through the use of data, research, and advanced analytics in the design, marketing, and distribution of their products. For more information on kasina's distribution intelligence technologies, advanced analytics and research, and strategic advisory services, visit www.kasina.com.

About DST
DST Systems, Inc. is a leading provider of sophisticated information processing and servicing solutions to companies around the world. Through its global enterprise, DST delivers strategically unified transactions and business processing, data management, and customer communications solutions to the asset management, brokerage, retirement, and healthcare markets. Headquartered in Kansas City, MO., DST is a publicly-traded company on the New York Stock Exchange. For more information, visit www.dstsystems.com.

Media Contact:

Laura M. Parsons
DST Global Public Relations
816.843.9087
mediarelations@dstsystems.com 

Photo - http://photos.prnewswire.com/prnh/20151202/292828

 

SOURCE kasina



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