It’s been a cruel month for U.S. asset managers.
BlackRock Inc., State Street Corp. and rivals have seen their shares take a hit as jittery institutional investors have seized up in choppy markets. The other culprits: weak revenue, lackluster fund flows and the perception that the industry is racing toward zero fees.
“For the next stretch it’s going to be tough going as investors are likely to shoot first and ask questions later,” Glenn Schorr, an analyst with Evercore ISI, said in a note to investors last week.
An S&P index of asset managers and custody banks is down 14 percent this month, compared with a 9.3 percent drop in the S&P 500 Index. Year to date, the asset managers index has lost almost a quarter of its value and it’s headed for the biggest annual loss since 2008.
BlackRock set the tone for the industry’s rough earnings season. Its long-term net inflows of $10.6 billion for the third quarter were the lowest quarterly figure since 2016. In an interview, Chief Executive Officer Larry Fink said he was “not particularly happy” with the results.
BlackRock spent most of the year with its share price trading well above $500, but it hasn’t closed above that level since July. While the shares rose almost 1 percent on Monday, the stock is down 17 percent for October.
Still, analysts at Credit Suisse and Edward Jones noted BlackRock’s mix of business lines will continue to help it outperform peers, because it has enough variety to withstand different market cycles.
State Street also had to answer for disappointing results. The Boston-based firm’s third-quarter revenue and earnings fell short of analysts’ estimates in part because fees came under pressure as investors cut back on risk. On the day the company reported earnings, shareholders hammered the stock price, pushing it down 8.5 percent.
Third-quarter fee revenue fell 3.3 percent from the previous quarter and increased only 2 percent from the previous year.
“At the broadest level the de-risking, which began in the second quarter, has only continued,’’ State Street CEO Jay Hooley said on the conference call, adding that the pressure was most intense in Europe and the emerging markets.