The bifurcation of fortunes in the asset management industry is here to stay, though market volatility may put more money in motion in the short term, according to a publicly traded multinational's U.S. chief.
, U.S. country head for Macquarie Group
and deputy global head of the group's Macquarie Investment Management
] arm, made that case today at Macquarie IM's media luncheon at Estiatorio Milos in New York City. Other presenters included: Roger Early
, Macquarie IM's global co-head of fixed income; John Leonard
, global head of equities; Chris Beck
, chief investment officer for small- and mid-cap value equity; and Kelley McKee
, senior PM on Beck's small- and mid-cap value equity team.
Looking at the top 250 asset managers in the U.S., Lytle tells reporters, 35 percent of the industry is suffering negative growth (but still has an average margin of 32 percent), while 35 percent of the industry has zero net growth (with an average margin of 30 percent) and 30 percent of the industry is growing at an average of 4.6 percent (with 36-percent margins).
"The gulf between the haves and the have-nots in asset management is growing," Leonard says.
"This is very different than before the crisis [in 2007-2009]," Lytle agrees, pointing to the 30 percent of the industry that's currently growing. "Before the crisis, 70 percent of the asset managers were here!"
(Macquarie IM is on the growing side, Lytle notes, with positive net flows in U.S. mutual funds that put it in the top 30 firms this year. The Philadelphia-based firm now has $253.3 billion in AUM.)
Put another way, flows have suffered in the past decade, Lytle says. Before the financial crisis, the industry was bringing in annual net flows of 3.5 percent of AUM. That dropped to 1.7 percent in the recovery years after the crisis, and in the last few years it's fallen to 0.4 percent. There is flows hope, Lytle says, predicting that market volatility will put money in motion and drive investors to reallocate and push more flows to active (especially to strategies that can complement passive ones). But the bifurcated growth picture is not going away, he says.
"I don't think this is going to change," Lytle says.
That bifurcated growth picture, plus volatile flows, could push up strategic activity in the industry, too. Indeed, the Macquarie IM is still on the hunt
"We are continuing to expand our global scale, adding new investment capabilities in these specialty strategies," Lytle says. "You can differentiate yourself. You can grow in this industry."
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