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Barclays on Tuesday expanded its coverage on assets managers, handing out Underweight ratings to Franklin Resources (NYSE:BEN), T. Rowe Price Group (NASDAQ:TROW) and Virtus Investment Partners (NYSE:VRTS), and an Overweight rating to BlackRock (NYSE:BLK).
“Relative to the rest of our coverage, we see the traditional asset managers facing the most meaningful industry-wide headwinds,” analyst Benjamin Budish wrote in a note to clients.
Asset managers typically generate strong cash flows and are known for returning capital generously, he noted. Still, despite the potential for rapid assets-under-management growth driven by market gains, organic revenue growth can be challenging due to competitive pressures and shifts in product mix, such as the transition to exchange-traded funds from mutual funds.
BlackRock (BLK), a leader in the traditional asset management space and also a sizable player in the alternatives space, is expected to sustain its relative outperformance, the note said, given its strong organic net inflows, as well as its “brand recognition, breadth of offerings, scale, and ability to compete on price.”
Seeking Alpha’s list of assets managers (and custody banks) ranked by the Quant rating system.
In Tuesday morning trading, (BLK) edged up 0.2%, while (TROW) slipped 0.7%, (BEN) -1.2% and (VRTS) -1.8%.
