As financial markets recovered from the lows of March 2009, average assets under management for full year 2010 rose 42% from 2009 levels, leading to higher fee revenue for 18 of the 19 managers included in the annual study.
Operating expenses rose 25% in 2010, as companies once again began to invest in personnel and technology. However, these higher costs were eclipsed by a 35% increase in operating revenue, leading to an aggregate 4% increase in pre-tax operating margins.
The report says the continuing focus on fees (including the industry-wide transition to lowest-fee share classes), costs for U.S. and global distribution, and investments in technology, compliance, and talent continue to challenge investment managers. A weakening stock market and persistent near-zero short term interest rates could pressure many investment management profits and margins.
Strategic Insight research clients can access the full report at http://www.sionline.com/research/subscriber_insights/789.pdf.