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How the public markets are valuing asset managers
By Greg Bright
Recent work by Boston-based communications agency CL-Media Relations LLC has raised some interesting questions over correlations between asset managers’ funds under management and their market cap. It’s not about the total of FUM, it’s more about how it was derived.
The communications firm, co-founded by partner Rich Chimberg, has presented clients and others with the table which lists the world’s 50 top largest pure-play listed funds managers by market capitalisation. Six of them are Australian. The results may surprise many market participants.
BlackRock, the largest manager in the world by a wide margin, with about US$8 trillion under management, is only just ahead of alternatives managers Blackstone Group of the US and Brookfield Asset Management of Canada in terms of market cap. They go: BlackRock, US$78.1 billion, Blackstone US$67.1 billion, and Brookfield, US$60.2 billion. The ranking falls away sharply after that.
Chimberg says that listing was undertaken, primarily, to show that FUM was not necessarily the only important datapoint to examine. “The fact that six of the largest 10 listed asset managers by market cap are in alternatives and have far less in FUM than their traditional counterparts says that the market understands asset management businesses well and doesn’t value passive assets [of which BlackRock is also the world’s biggest manager] as much.
“The value placed on alternatives assets also validates the Casey Quirk projections for how increasingly significant private markets are to the global investment management industry. (Casey Quirk, the global consultant to the funds management industry, is a client of CL-Media Relations.) “That, to me, is in large measure due to the lack of transparent and measurable benchmarks in alternatives. There’s nothing there to equal what exists in stocks and bonds, and no Vanguard to be the low-cost provider and take market share away on fees,” Chimberg says.
The study excludes listed banks, insurers and wealth managers with significant businesses outside asset management, which will tend to diffuse the asset management impact on their group market cap.
The Australian firms in the top 50 are: Magellan, with $US 7.3 billion (ranked number 17); Pendal, US$1.9 billion (35); Platinum, US$1.8 billion (36); Perpetual, US$1.3 billion (38); VGI Partners, US$0.63 billion (46); and Pinnacle, US$0.60 billion (equal 50).
(Note: there are actually 53 managers in the list due to equal rankings.)
