This Day On The Street
Continue to site right-arrow
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here

Are Fund Managers Better Than Their Funds?

For investors still cringing at their IRAs, 401(k)s or taxable mutual funds and exchange-traded funds, are you ready to take a chance on the companies that have brought you so many unhappy returns?

"You have to be selective on the companies," says Greggory Warren, who follows the asset-management arena for the financial research firm Morningstar. "Some are in far better shape than others."

Among sell-side analysts, there are no screaming buys among publicly traded asset-management firms. Most of the screaming comes from people whose funds and their asset-management-stock prices have dropped sharply over the past 12 months, often in harmony with the broader market, but occasionally much more.

Thomson Reuters compilations of sell-side analyst opinions for 10 asset management companies don't reveal any in which the number of buys surpasses the combined number of holds and sells.

Give or take a few percentage points, some asset management stocks have matched the S&P 500, which was down 36% for the 12 months ended April 17.

Many others made the S&P 500's decline look good. Legg Mason (LM - Get Report) was off 64%, Janus Capital Group (JNS - Get Report) dropped 65%, and AllianceBernstein Holding (AB - Get Report) fell 66%.

Because asset-management stocks are driven by the health of the economy and the market, analysts say they bear watching for indications of a rebound.

"This group is typically is a first mover on any signs of a recovery and will move well before underlying fundamentals," says a recent report by Stifel Nicolaus. "In any early market recovery, the stocks would look expensive until the fundamentals catch up, presenting a challenge to investors until a market recovery can be established."

1 of 5

Check Out Our Best Services for Investors

Action Alerts PLUS

Portfolio Manager Jim Cramer and Director of Research Jack Mohr reveal their investment tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
Quant Ratings

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
Stocks Under $10

David Peltier uncovers low dollar stocks with serious upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
14-Days Free
Only $9.95
14-Days Free
To begin commenting right away, you can log in below using your Disqus, Facebook, Twitter, OpenID or Yahoo login credentials. Alternatively, you can post a comment as a "guest" just by entering an email address. Your use of the commenting tool is subject to multiple terms of service/use and privacy policies - see here for more details.
Submit an article to us!
AB $30.93 0.19%
EV $41.73 0.22%
FII $33.75 -0.41%
JNS $17.34 0.87%
LM $55.18 -0.04%


DOW 17,698.18 -77.94 -0.44%
S&P 500 2,059.69 -8.20 -0.40%
NASDAQ 4,880.2280 -20.6570 -0.42%

Partners Compare Online Brokers

Free Reports

Top Rated Stocks Top Rated Funds Top Rated ETFs