The UK asset management sector has been significantly derated over the past couple of years. It has faced the dual problem of a shift towards passives and to private assets and away from traditional listed equities and bonds. However, the sector’s assets haven’t collapsed; its margins have proved relatively robust and its profits fairly stable, even against all the rising costs. The clear implication, to us at least, is that the lowly rating the sector now sits on assumes that the twin asset shift threat will continue and will eventually crater its profits. In our view, this seems far too apocalyptic an assumption. The Trump upheavals may well upset the trend to passives – with such a substantial proportion of wealth now exposed to just a few mega US stocks – and the long bull run of private equity seems unlikely to continue in an era of higher interest rates. Relentless extrapolation is a dangerous game in investment.
We wrote a piece on asset manager valuations in February 2023 and, by popular request, we have revisited the topic. We began our 2023 report with this summary:
“Asset managers had a poor 2022: the S&P Composite 1500 Asset Management Index was down 22% and, according to the Investment Company Institute (ICI), worldwide mutual funds fell by 20%, from $76tr to $60tr. When bond and equity markets fall, the results are unlikely to be pretty: with revenues trending down and multiples contracting, there is a double whammy to contend with.”
Since then, equity markets – or US ones at least – have risen strongly. Between the beginning of 2023 and 10 April 2025, the S&P 500 was up 40% and the S&P Bond Index up 8%. Worldwide Mutual fund assets have recovered from $60tr back to $74tr at the end of 2024. Yet, the Asset Management Index (which comprises purely US companies) is up only 11%.
Things are faring a little worse here in the UK. From our sample of companies in 2023, two – Hargreaves Lansdown and Mattioli Woods – have disappeared to takeovers, so we have eliminated them from the starting comparison data too. The 20 UK-listed companies, on average, have fallen 27% since our February 2023 report. Among them, the 13 asset managers have fallen by an average of 45%, the five wealth managers have fallen 8%, and the two platforms have increased by an average of 19%.
