In this edition of Hardman Talks, Keith Hiscock speaks with highly experienced Hardman & Co analyst Jason Streets about his latest note ‘Attractive asset managers – Radical derating presumes things only get worse’ on the asset management sector, which has experienced a significant derating over the past couple of years. Despite broader market gains, listed asset managers have underperformed sharply, with valuations falling well below historical norms. This disconnect raises important questions about investor sentiment and the long-term positioning of traditional fund houses.
The core challenge lies in the shift in asset flows — away from active management and into passive strategies and private markets. As investors increasingly favour low-cost index funds or seek higher returns through private assets, the traditional model of equity and bond fund management has come under sustained pressure. Yet, despite these headwinds, the sector has proven more resilient than the market reaction suggests.
Crucially, assets under management have not collapsed, margins have remained relatively robust, and profits have held up — even in the face of rising cost pressures. While the long-term implications of these changes are still unfolding, the fundamentals of many listed UK asset managers appear sound. This creates potential opportunities for investors willing to look beyond the current market narrative.
Read Jason’s previous note Asset managers had a poor 2022.
