European asset manager’s average asset fell by 1.5 percent during the first half of this year, media reports said. During the same period, fees also shrank by 9 percent.
A survey carried out by credit rating agency Moody’s revealed that average profit margins (EBITDA) dropped to 27 percent, from 30 percent in the second half of 2019, due to lower management fees.
Senior analyst at Moody’s, Marina Cremonese told the media, “A positive market performance since Q1 means management fees and margins could recover in the second half of the year. However, we remain cautious as market risk is still high given a slower than anticipated economic recovery from the initial coronavirus shock, and a strong resurgence of Covid-19 cases.”
“We therefore expect EBITDA margins to remain near current levels, despite our expectations of more volatile market conditions in 2020,” Martina added.
The European asset managers surveyed by Moody’s attracted net inflows of €65 billion during the first six months of 2020 as cautious investors poured money into money market and fixed income products in the second quarter of the year.
Martina further said, “While markets have performed well in Q2 and into Q3, largely thanks to aggressive action by the US Federal Reserve and other central banks, the economic outlook remains weak, with risks to the downside. As AUM, revenue, cashflow and earnings are all highly correlated to the performance of financial markets, asset managers’ financial profile will remain at risk for the rest of 2020.”