The overall analysis for the Investment Management industry and how asset managers continue to have a winning streak in 2022.
FREMONT, CA: Asset management/investment management stocks remain the bellwethers of Wall Street, with the Dow Jones U.S. Asset Managers Index up 37.8 percent to date (as of December 30) for 2021 and 11.7 percent in 2020. The index has also outperformed the S&P 500 Index, which has gained nearly 28 percent this year. As a result, three asset management stocks namely BrightSphere Investment Group Inc. BSIG, Federated Hermes, Inc. FHI, and Victory Capital Holdings, Inc. VCTR are showing up. These stocks have gained more than 25 percent year to date and are expected to also perform well in 2022.
Furthermore, like in 2020, the asset management industry faced margin pressure from lower fees even this year, which resulted in a shift toward passive investment strategies, rising capital expenditure to support digital transformation efforts, and higher compliance costs. Despite the market volatility caused by the pandemic, the industry emerged stronger, with assets under management (AUM) balance reaching a record 115 trillion dollars in 2020.
Similarly, the asset management industry has seen a steady improvement in AUM balance this year, owing to growing optimism about a robust economic recovery. Though asset managers will face the aforementioned headwinds, including inflation, as we approach 2022, there are numerous opportunities driven by rising demand for Environmental, Social, and Governance (ESG) and digital assets.
Therefore, the AUM is predicted to grow steadily in the coming years as it is driven by the rising inflows. Further, Assets managers revenues are also anticipated to rise fueled by increasing performance fees and investment advisory fees, which holds for the majority of their revenues. Conclusively, the overall overview looks fairly positive for the Investment Management industry.
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