|Bid||0.0000 x 0|
|Ask||0.0000 x 0|
|Day's range||3.3300 - 3.3300|
|52-week range||2.0100 - 4.3500|
|Beta (5Y monthly)||1.17|
|PE ratio (TTM)||10.67|
|Forward dividend & yield||0.27 (8.06%)|
|Ex-dividend date||20 Aug 2020|
|1y target est||N/A|
(Bloomberg Opinion) -- BlackRock Inc., the biggest beast in the fund management forest, on Tuesday announced that it grew its assets under management by 12% to $7.81 trillion in the third quarter from a year earlier. In normal times, that would be a staggering achievement; coming in the middle of a pandemic, it’s astonishing. It highlights the advantage that scale brings in winning new business and retaining existing clients in the arena of managing other people’s money.It’s one of a trio of recent developments that reinforce the growing schism between the haves and the have-not-enoughs in the fund management industry. This week’s announcement that Fidelity Investments plans to hire 4,000 new staff in the next six months is further evidence that size matters more than just about everything else, as is Morgan Stanley’s $7 billion purchase last week of Eaton Vance Corp. to gain its $500 billion of assets.With $3.3 trillion under management, Fidelity is a member of the exclusive $1 trillion club — the supposed minimum amount of funds required to compete effectively for customers. As central banks have pumped trillions of dollars into the global economy to offset the economic effects of the pandemic, the firm says it’s enjoying a bonanza of new and existing customers opening more accounts and trading more actively.For Morgan Stanley, the Eaton Vance transaction will swell the amount it oversees in its eponymous investment management division to $1.2 trillion. As my colleague Brian Chappatta wrote last week, the U.S. bank’s Chief Executive Officer James Gorman had made no secret of the need to scale up in asset management.But fewer than 30 asset managers around the world have managed to clear the $1 trillion hurdle, according to a report published this week by Greenwich Associates. Those on the wrong side of the velvet rope need to distinguish themselves by either the products they offer, the clients they serve or the investment approach they pursue. Even then, the Greenwich report says, “success will be achieved only by managers who select the proper strategy and then beat the competition through consistent, superior execution.”Although that’s a chilling message for the mid-tier firms that make up most of the sector, it could be a boon for the mergers and acquisitions bankers who’ve been circling the fund management industry for years with deals in mind. In Europe in particular, only France’s Amundi SA currently qualifies for the top division, with about $1.9 trillion of assets.The mergers that produced Janus Henderson Group Plc and Standard Life Aberdeen Plc saw clients pulling money out of both firms as they struggled to integrate different cultures. The results have deterred rivals from following suit. But as the biggest firms continue to win an even greater slice of the asset management pie, the message is becoming clearer: Go big, or go home.This column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.Mark Gilbert is a Bloomberg Opinion columnist covering asset management. He previously was the London bureau chief for Bloomberg News. He is also the author of "Complicit: How Greed and Collusion Made the Credit Crisis Unstoppable."For more articles like this, please visit us at bloomberg.com/opinionSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.
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(Bloomberg Opinion) -- Just as the fund management industry’s much-anticipated consolidated wave seemed indefinitely stalled, there’s a European sale in the offing that could spark a bidding war. It offers a one-shot opportunity to amass customers and cash in an industry where size really does matter. First mooted more than a year ago, Societe Generale SA plans a disposal of its Lyxor fund management arm in the fourth quarter in a sale that could bolster the bank’s capital position by raising as much as $1 billion, Reuters reported last week. With assets of about 147 billion euros ($172 billion) split almost evenly between active management and the low-cost passive products that investors have been favoring by droves of late, it’s a prize worth fighting for.Yes, the mergers that produced market behemoths Standard Life Aberdeen Plc and Janus Henderson Group Plc were bedeviled by the complication of combining different cultures, and the ensuing outflows of customer cash have deterred other firms from following suit. But the motivation that spurred those tie-ups – the need to bulk up and achieve economies of scale – remains compelling. So Lyxor could attract interest from all of the region’s biggest players. Lyxor is responsible for 65 billion euros of Europe’s 900 billion euros of exchange-traded funds, according to data compiled by Bloomberg Intelligence. While dwarfed by BlackRock Inc.’s 400 billion euros, that still makes it the third most active issuer of the index-tracking products with a 7.2% market share. That would be enough to catapult either Amundi SA or UBS Group AG into second place in the ETF league tables, or to cement DWS Group GmbH’s position as the region’s No. 2 player in passive strategies.DWS, with about 745 billion euros under management, is likely to be keenly interested. Chief Executive Officer Asoka Woehrmann has said playing an active role in consolidation was a “personal ambition,” as well as forming part of his strategy for challenging larger rival Amundi’s dominant position in Europe.DWS’s 80%-owner Deutsche Bank AG has even bigger plans, aiming to grow the firm into one of the world’s 10 top global asset managers. Organic growth won’t achieve that. Buying Lyxor would help. Still, Woehrmann has spoken before of the need for potential acquisitions to offer “a cultural fit.” The French-ness of Lyxor may make it a better match for Amundi.The Paris-based firm has a proven track record of assimilating purchases as it’s grown to become Europe’s biggest asset manager, overseeing 1.6 trillion euros. Pioneer Investments, bought from Italy’s UniCredit SpA in 2017, added about 220 billion euros of assets. The agreement this year to buy Spanish bank Banco de Sabadell SA’s asset management unit brought another 22 billion euros of assets.Amundi CEO Yves Perrier’s appetite seems undiminished. He told Corriere della Sera in May that he’s open to further purchases. With Lyxor, Amundi would leapfrog DWS in the ETF league table while preventing its main European rival from bulking up instead. Lyxor’s stable of ETFs may also be an attractive way for a firm that doesn’t currently offer low-cost index trackers to get into that fast-growing business. While Standard Life Aberdeen’s previous boss Keith Skeoch was adamant that he wasn’t interested in pursuing the low-margin opportunity offered by passive products, the firm is under new management, and Citigroup Inc. veteran Stephen Bird, who took charge this month, may take a different view.Growing a passive business from scratch at this stage in the game would be almost impossible, and an ETF business with the scale of Lyxor is unlikely to become available again. Standard Life Aberdeen investors who’ve seen the value of their shares halve since the August 2017 merger, however, may balk at the thought of attempting a second integration.Other potential suitors may include UBS, which last year seemed poised to do something transformative with its fund management unit with mooted transactions including a merger with DWS. A banking merger between the Swiss institution and a European rival could involve spinning off the fund business which would be better able to stand alone with the added heft of the Lyxor assets.There’s also Schroders Plc, which recently overtook Standard Life Aberdeen to become the U.K.’s biggest standalone fund manager, although it’s focused on building its wealth business.Of course, Societe Generale may decide its need for capital isn’t sufficiently pressing for it to offload its fund management arm, even after posting its worst quarterly loss in more than a decade. But if it does finally proceed, an auction would deliver a fascinating insight into what the next chapter has in store for the biggest players in the European fund management industry. Here’s hoping it does.This column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.Mark Gilbert is a Bloomberg Opinion columnist covering asset management. He previously was the London bureau chief for Bloomberg News. He is also the author of "Complicit: How Greed and Collusion Made the Credit Crisis Unstoppable."For more articles like this, please visit us at bloomberg.com/opinionSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.