Asset Manager Shares Mostly Rise On Upgrades

Shares of Invesco rose 47 cents, or about 2.7 percent, to $17.64 in afternoon trading, while T. Rowe Price was up 72 cents, or about 1.7 percent, to $42.67. Shares of Franklin Resources — which operates as Franklin Templeton Investments — fell 88 cents, or about 1.2 percent, to $71.38 despite the upgrade, while Legg Mason's shares rose 74 cents, or about 3.3 percent, to $23.15. BlackRock's shares fell $3.78, or 2.2 percent, to $163.67.

Among major asset managers, organic growth trends in first-quarter flows of fixed income investments such as bonds were the best since the second quarter of 2007, Walsh said.

While organic flows to equities continued to decrease in the first quarter at an annualized rate of 3 percent, the decline marked an improving trend measured against the 10 percent annual rate of decline in last year's fourth quarter, Walsh said.

The trends should boost asset managers' earnings, which could be further enhanced by a potential flow of investor cash out of safe-harbor money-market funds and into fixed-income investments and equities, Walsh said. Trends suggest money-market assets peaked in last year's fourth quarter and this year's first quarter, he wrote.

Money funds — typically short-term investments from which money managers earn relatively small fees compared with longer-term investments — became safe havens for many investors amid the market turmoil of last fall and early this year. Historically, longer-term funds attract more cash during market recoveries when investors flee money funds for riskier investments offering potentially higher returns.