Market Gains Lift Q4 2020 Results for Listed Asset Managers, Yet Financial Performance Gap Widens: Casey Quirk

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Mar 02, 2021, 09:00 ET

NEW YORK and STAMFORD, Conn., March 2, 2021 /PRNewswire/ -- Publicly traded asset managers in North America and Europe ended a rollercoaster 2020 with solid fourth-quarter financial results as capital markets boosted revenue, assets under management (AUM) and operating profits ahead of 2019 levels – hitting an all-time high watermark for revenue, according to asset management strategy consultant Casey Quirk, a Deloitte business.

Casey Quirk's analysis of 26 standalone listed asset managers shows aggregate revenue increased 2% in the fourth quarter of 2020 compared with the year-earlier period. The median profit margin for these firms was 35% in the fourth quarter, compared with 29% in the fourth quarter of 2019. AUM rose 5% for these firms, with a combined total of $18 trillion.

Casey Quirk's quarterly analysis now includes both traditional and alternative managers in recognition of the growing number of listed firms specializing in private markets investing. Casey Quirk has previously projected that active long-only private markets strategies will generate 32% of total asset management industry revenue by yearend 2024, up from 28% at the end of 2019.

"Listed managers enjoyed robust gains in 2020. Yet investor preferences for passive, some high-performing active strategies, and private markets are tilting industry economics to favor a narrow group of asset managers that have taken advantage of these trends," said Amanda Walters, a principal at Casey Quirk. "A select group of firms with more than $150 billion in AUM has generated more profitable growth than peers consistently over a five-year period. The trend was even further pronounced in 2020."

The top quartile of firms in the Casey Quirk analysis increased revenue by 9.0% in 2020, while revenue fell 5.1% for the managers in the bottom quartile.

"As competition from lower-fee passive strategies continues to pressure traditional active managers, Casey Quirk forecasts that firms specializing in managing publicly traded stocks and bonds will increasingly look to build and buy investment expertise that is more resistant to indexing," said Scott Gockowski, senior manager at Casey Quirk. "That includes private equity and debt, ESG investing, hybrid public-private solutions, and activist investing."

Casey Quirk, a business of Deloitte Consulting LLP, is a leading management consultancy that focuses solely on advising asset management firms. Casey Quirk was established in 2002 and acquired by Deloitte in June 2016. The organization has advised a majority of the 50 largest asset management organizations worldwide, including eight of the top 10. Casey Quirk provides senior leadership teams with broad business strategy reviews; investment positioning and strategy consulting; market opportunity evaluations; organizational design; ownership and incentive structuring; and transaction due diligence. For more information, please see the Casey Quirk website here.

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SOURCE Casey Quirk