But analysts and fund managers say they have to be much more selective to make money by buying shares of fund companies. Even with their depressed share prices, not every one is a bargain.
Investors say it requires specific attributes – a fund lineup with a history of beating peers or a sizable money market business – to help a company expand while the broad industry slows.
“Not everyone is going to be comfortable going with a completely passive approach, especially if the market continues to be volatile,” said Stephen Biggar, an analyst at Argus Research.
Judson Brooks, an analyst who works on the $17.5 billion Oakmark Fund, said his fund owns shares of T. Rowe Price - down 14 percent year to date - largely because its track record of beating its peers should continue to attract assets.
The company announced in July that 76 percent of its funds outperformed their Lipper averages over the last three years, and 86 outperformed their peers over the last 10 years.
"The essential element of the company is that they have been able to maintain their outperformance, and we think they have a culture where that is going to continue," Brooks said.
Higher interest rates, meanwhile, should help the companies expand their margins. A 0.25 percent increase in interest rates would allow mutual fund companies to recoup 65 percent of fee waivers, while a 1.0 percent increase in rates would allow firms to eliminate fee waivers entirely, analysts say.
T. Rowe Price waived $12.5 million in fees last quarter to maintain positive yields for investors in money market accounts, an amount roughly equal to what it spent on advertising and marketing. Once interest rates rise high enough, ending fee waivers should boost its revenues by about 1.3 percent, analysts say.
Higher rates would especially help Federated Investors, which has approximately 69 percent of its $354 billion in assets under management in money market funds, said Argus' Biggar. Shares of the company are down 9.8 percent for the year to date and trade at a forward price to earnings ratio of 16.1, according to Thomson Reuters data.