DST kasina Report Shows Operating Margins For Asset Managers Falling On Lower Revenue And Higher Operating Costs

Analysis Suggests Challenging Environment for Active Investment Management Strategies Likely to Continue

Mar 08, 2016, 08:00 ET from DST Systems, Inc.

NEW YORK, March 08, 2016 /PRNewswire/ -- DST kasina, a provider of data-driven insights and distribution solutions to financial companies around the world, today released its fourth quarter DST kasina Asset Manager Composite results.

According to the report, operating margins for the 16 asset management firms that comprise the Composite fell to 33.5% on a weighted basis for the quarter, down by 131 basis points from the prior quarter and 114 basis points from Q3 2015. On a simple average basis, operating margins fell by 118 basis points sequentially and 182 basis points year over year.

DST kasina's analysis indicates lower revenue and escalating operating costs mostly from higher employee compensation, benefits, and marketing and advertising expenses accounted for most of the decline. 11 firms in the Composite actually posted an increase in assets under management, due mostly to rising domestic and equity markets returns in the final quarter of 2015. Net flows for 10 firms were negative during the period, while flows for three other firms were essentially flat.     

Firms that saw the steepest sequential decline in operating costs in the quarter involved some of the largest asset managers in the Composite, including BlackRock (down 228 bps), Affiliated Managers Group Inc. (down 234 bps), and Invesco Ltd (down 321). Other firms with a significant operating margin decline were Pzena Investment Management, Inc. (down 582 bps), Waddell & Reed Financial, Inc. (down 368 bps), and Cohen & Steers, Inc. (down 235 bps).

According to Larry Petrone, Director of Product Research & Consulting at DST kasina, the current quarter is likely to remain a challenging one for most of the firms.

"Returns through late February are largely negative across the equity markets, although domestic fixed income markets have been generally constructive," says Petrone. "Initial data through mid-February points toward net redemptions across the markets, particularly those that include active investment management strategies."       

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, and Pzena Investment Management.

About DST kasina
DST kasina helps leading companies in the financial services industry manage data, gain insight, and ignite change in their business. Through effective use of advanced analytics, research, and distribution intelligence technologies, DST kasina enables business to better understand, predict, and optimize key business factors impacting their asset growth and profitability. For more information on how to leverage DST kasina's strategic advisory services, visit www.kasina.com.

About DST
DST Systems, Inc. (NYSE: DST) is a leading provider of specialized technology, strategic advisory, and business operations outsourcing to the financial and healthcare industries. Combining unmatched industry knowledge, critical infrastructure and service excellence, DST helps companies master complexity in the world's most demanding industries to ensure they continually stay ahead of and capitalize on ever-changing customer, business and regulatory requirements. For more information, visit the DST website at www.dstsystems.com.

Media Contacts:

Lawrence Petrone Director of Product Research & Consulting DST kasina +1 646 257 4454 lpetrone@kasina.com

Laura M. Parsons DST Global Public Relations +1 816 843 9087 mediarelations@dstsystems.com

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SOURCE DST Systems, Inc.