NEW YORK, May 30, 2017 - DST kasina LLC, a provider of business intelligence that transforms distribution, marketing, and product development for asset managers, today released the results of its Asset Manager Composite for the first quarter of 2017.
After three consecutive quarters of sequential improvement, operating margins fell in the first quarter of 2017 by 200 basis points (compared to the fourth quarter of 2016) for the 15 publicly-traded asset management firms that comprise the DST kasina Asset Manager Composite1. In the same period, cumulative assets under management grew 3.8% quarter-over-quarter, and 4.8% year-over-year. The AUM level of nearly $11 trillion ($10.999 trillion) represented an all-time high for the Composite group.
"The first quarter of 2017 was somewhat unique in that strong sequential growth in composite assets only led to modest sequential growth in asset management fee revenues, implying increased signs of fee pressure," said Erach Desai, Senior Research Analyst with DST kasina. "With expenses already having been tightly managed for the past three quarters, the sequential rise in expenses pressured operating margins down in the first quarter – raising the specter of fee pressures starting to impact the historical 30%-34% range of operating margins for the composite group."
Key takeaways from the operating results for the public DST Asset Manager Composite companies can be summarized as follows:
Unlike the fourth quarter of 2016, where equity and bond market performance diverged, the first quarter of 2017 was solid on both fronts. US equities advanced to fresh all-time highs, buoyed by positive economic data and sentiment associated with President Trump's plans to cut taxes and regulations. The S&P 500 index surged by 6.1% in the quarter. Despite the anticipated 0.25% rate increase by the Federal Reserve, the bond market eked out a modest gain of 0.8% (based on the Bloomberg Barclays U.S. Aggregate Index). This broad-based equity market strength also played out largely on the international stage, especially emerging markets. The combination of these developments resulted in a sizable gains across various equity and fixed-income asset classes alike.
The first quarter performance for the DST Asset Manager Composite companies improved meaningfully compared to the fourth quarter of 2016:
Note: DST kasina's asset manager composite includes: BlackRock, Franklin Templeton, Invesco, Legg Mason, T. Rowe Price, Affiliated Managers Group, Alliance Bernstein (AB), Federated Investors, SEI, Janus Capital Group, Waddell & Reed, Artisan Partners, Cohen & Steers, GAMCO Investors, and Pzena Investment Management.
About DST kasina
DST kasina, LLC, 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 helps businesses to better understand, predict, and optimize key business factors impacting their asset growth and profitability. For more information on how to leverage DST's strategic advisory services, visit www.kasina.com.
DST Systems, Inc. (NYSE: DST) is a leading provider of specialized technology, strategic advisory, and business operations outsourcing to the financial and healthcare industries. We enable clients to transform complexity into strategic advantage by helping them continually stay ahead of and capitalize on ever-changing customer, business and regulatory requirements in the world's most demanding industries.
Laura M. Parsons
DST Global Public Relations
1 The number of firms included in the DST kasina Composite dropped from 16 to 15 with Calamos Investments going private on February 21, 2017. All historical references have been adjusted to exclude Calamos from the analysis.
2 As BlackRock represents approximately 49% of the DST kasina Asset Manager Composite group's overall assets, we like to analyze some of the quarterly results by looking at the group excluding BlackRock.
3 SEI Investment is the only asset manager in our Composite that does not report new flows as an ongoing communications practice.