UBS on U.S. Asset Managers: 1Q12 Halftime: Strong Markets and Improving Industry Flows

UBS on U.S. Asset Managers: 1Q12 Halftime: Strong Markets and Improving Industry Flows

Analyst, Alex Kramm, said, "Industry growth improves as equity flows return and markets drive upside: 2012 has started well for the asset management industry. Long-term mutual fund flows of $51bn in the last 5 weeks (6% annualized growth) has more than erased the $25bn of industry outflows seen in all of 4Q11. Flows into equity funds have turned positive again, although fund flows into bond and hybrid funds continue to lead the charge. While organic growth has been solid so far this year, markets have done their part as well, with major equity markets up 8%+ so far this year."

"Covered asset managers participating in the upside: January data points for managers in our coverage point to significant asset growth driven by strong market performance and improving flows. U.S. mutual fund flows for Franklin (NYSE: BEN) (10%) and T Rowe Price (Nasdaq: TROW) (5%) are leading the charge, while ETF flows continue to be very robust for BlackRock (NYSE: BLK). With February having remained solid so far, we expect to see further upside from the latest reported data points. We are raising both near-term and longer-term estimates to reflect most recent asset levels."

"While the asset managers in our coverage have performed well (avg +16%) relative to the market (+8%) and broader financials (+14%) so far this year, we believe the group could see more upside."

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