While this trend makes mutual fund companies a more attractive investment, it may also forebode higher investment fees for 401(k) plan participants.
At United Asset Management , record first-quarter results came from a surge at the firm’s Pilgrim Baxter & Associates affiliate. Financial Research Corp. reported that PBHG funds, many of which earned triple-digit returns in 1999, took in a net new $2.5 billion last year, thanks to their momentum-style investing in fast-growing companies, according to the Dow Jones report. That was a total reversal from 1998, when a net $2.4 billion flowed from the Wayne, Pa.-based fund family.
Mutual fund complexes with broader-based businesses are not as exposed to such swings. State Street ‘s assets under management soared 33% over the last year, and recently beat earnings expectations by a nickel/share, according to Maitland Lammert, financial services analyst with Edward Jones, cited in the report. The stock is up 33% year-to-date.
Federated Investments’ stock is also up about 33% this year, as the Pittsburgh-based company increased its equity assets by 45% over the past year. Assets at Putnam Investments are up 38% compared with a year ago, and parent Marsh & McLennan reported a 16% gain in earnings per share from a year ago.
Meanwhile, Chicago’s John Nuveen has turned it’s attention to equity products, which accounted for 80% of their first quarter sales, up from just 60% in 1999. Assets under management are up 5%, earnings per share were up 15% in the first quarter. T. Rowe Price increased its assets under management 25%, and saw its earnings rise 41%.