Market MovesJune 7, 2023

Asset Managers See Revenue, Income Drop in 2022

It was a tough year, but margins didn’t suffer that much, ISS Market Intelligence says.

Reported by Larry Light

Last year was a rough one for investments, and asset managers took it heavy, as both margins and revenue slipped, according to a report from ISS Market Intelligence.

ISS Market Intelligence, like CIO, is owned by Institutional Shareholder Services Inc.

In 2022, publicly traded managers’ revenues slid 7.3% for the median manager. The decline was even greater for operating income, which tumbled 22%.

That said, revenue as a percentage of average assets increased for a third consecutive year, to 0.46%, which the report said indicated faster revenue growth as assets recover.

Operating margins were off, but not by very much: They dropped to 33.1% from a relative high of 36.6% in 2021, a much more benign market year. But at least 2022’s showing surpassed the 10-year average of 30.0%. Only two managers, of the 21 surveyed, expanded their profitability over the prior year. Nonetheless, a majority were above their levels from 2020, another turbulent time.

Managers’ fees usually are based upon assets under management, which tend to shrink during shaky markets. On the positive side, the report commented: “With firms having rode out the storm of 2022 with relatively high margins still intact, expect the eventual market rebound to drive a robust revenue recovery.”

This year, with the markets doing better, asset managers have been busy launching their own new funds, with 64 registered in March and 56 in April. Most are exchange-traded funds.

The most new fund filings in April came from BondBloxx Investment Management Corp., Regents Park Funds and Innovator Capital Management LLC, each filing four new ones. In general, stocks had the highest representation among the new funds.