Both Citigroup Inc. (NYSE: C) and Stifel Nicolaus Corp (NYSE: SF) have released their assessment of asset managers, based on performance as of the end of August, 2012. The analysis and observations converge on many points. Citi’s Asset Manager Global Performance Tracker sums up the performance of the largest U.S. and global equity and fixed income mutual funds, closed-end funds, ETFs, and UCITs amounting to $1T in AUM for the 3rd quarter of 2012 so far.
The Good News
Citi: The overall performance has been good so far, especially in July, 2012. Trends were up and strong in equities (composite index up 2.4 percent) and fixed income (up 50 bps). Both equity funds and weighted average equity funds were ahead of the Morningstar category by 7bps and 18 bps.
SN: Equities and fixed income funds performed well and gained speed in June/July, volatility is gradually easing.
The Bad News
The comparative performance across asset managers followed a downward trend, as 8 out of the 13 managers under Citi’s scrutiny underperformed the Morningstar category.
The Best and Worst Performers
In equities, AllianceBernstein (NYSE: AB) , Waddell & Reed (NYSE: WDR), Legg Mason (NYSE: LM), T. Rowe Price Group, Inc. (NASDAQ: TROW), and Manning and Napier (NYSE: MN) came off as leaders, as their performance was up in the range of 3-3.2 percent in August. The worst in equities were Affiliated Managers Group (NYSE: AMG) , BlackRock Inc (NYSE: BLK (NYSE: BLK) , Franklin Resources Inc. (NYSE: BEN) , and Artio Global Investors Inc. (NYSE: ART), the performance was still positive but fell in the lower range (+1.6 to 1.9 percent in August) .
In the fixed income category, Artio Global Investors Inc. (NYSE: ART), Waddell & Reed (NYSE: WDR), Eaton Vance Group (NYSE: EV), T. Rowe Price Group, Inc. (NASDAQ: TROW), Affiliated Managers Group (NYSE: AMG) , and Invesco Ltd (NYSE:IVZ) were up in the range of 0.7 -1 percent. In contrast, The Charles Schwab Corporation (NYSE: SCHW), Federated Investors (NYSE: FII), Franklin Resources Inc. (NYSE: BEN), and Legg Mason (NYSE: LM) lagged in the Morningstar category.
Citi favors US companies and asset managers over non-US companies and broker dealers. Citi’s top pick in Traditional managers is Affiliated Managers Group (NYSE: AMG), followed by Invesco Ltd (NYSE:IVZ), Federated Investors (NYSE: FII), AllianceBernstein (NYSE: AB), and WisdomTree Investments, Inc. (NASDAQ: WETF). In Alternative managers, Citi likes Och-Ziff Capital Management Group LLC (NYSE: OZM), Kohlberg Kravis Roberts & Co (NYSE: KKR), and The Blackstone Group LP (NYSE: BX). In pair trades, Citi recommends BEV as the best, while a combination of IVZ/JNS and AMG/TROW are also favored.
Stifel Nicolaus favors large diversified companies, such as BlackRock Inc (NYSE: BLK) (Buy, $176.93) and Invesco Ltd (NYSE:IVZ) (Buy, $23.82) as defensive positions, while Franklin Resources Inc. (NYSE: BEN) (Buy, $117.59) and The Blackstone Group LP (NYSE: BX) (Buy, $13.23) serve as contrarian value plays. SF made the biggest changes in their estimation of JNS, followed by TROW (Hold, $61.99), LM (Hold, $24.75), WDR (Buy, $30.50), & Franklin Resources Inc. (NYSE: BEN).