Eric Berg, CPA, CFA
Eric Berg, CPA, CFA, managing director and senior analyst specializing in the financial sector at RBC Capital Markets, a global investment bank operating in 15 countries, based in New York City. RBCCM.com
At a time when the stock market has been struggling and investors have been especially nervous, you might think it’s a bad time to buy stocks of companies that offer investment funds. After all, a big chunk of profits for these companies comes from the annual fees that the funds charge, and those fees represent a percentage of assets invested in the funds. So if the funds perform poorly and assets grow more slowly or even shrink, that means less profit.
But at a few of these companies, assets have been flowing in—and strongly. That’s because their funds offer superior performance and because the firms have introduced popular and innovative new products, including a variety of low-fee exchange-traded funds (ETFs) and “alternative” investments (explained below). In 2015, investors added a record $347 billion to ETFs.
Attractive asset-management company stocks now…
BlackRock Inc. (BLK) is the largest asset manager in the world. Its iShares brand, the leading domestic and global provider of ETFs, took in a net $130 billion last year, topping $1.1 trillion in total ETF assets out of a total of $4.5 trillion in overall assets at the company.
Blackstone Group (BX), the top manager of so-called alternative investments for the very wealthy—including hedge funds, private equity funds and specialty real estate funds—saw its assets increase by $100 billion in 2015 to a total of $300 billion.
Invesco Ltd. (IVZ) has found a lucrative niche in risk-averse ETFs such as the PowerShares S&P Low Volatility Portfolio.