NEW YORK (
) -- Asset manager stocks may be worth a look, as they appear to have largely escaped the toughest provisions of the Dodd-Frank Wall Street Reform and Consumer Protection Act.
A report from Keefe, Bruyette & Woods states asset managers "remained largely out of the bullseye of the sweeping financial regulatory reform bill." KBW says both "traditional" money managers and "alternative" asset managers got off relatively easy from the new rules.
While the KBW report did not mention all of these names in its report, "traditional" money managers refers to companies like
T Rowe Price Group
Principal Financial Group
. "Alternative" asset managers refers to private equity and hedge fund firms like
The Blackstone Group
Och-Ziff Capital management Group
also belongs in the "traditional" money manager camp, though it has flirted with the idea of
competing with investment banks
in certain businesses.
For the most part, shares of money managers have fared no better than those of big banks like Goldman, Morgan Stanley,
Bank of America
during the sell-off of the past two months. That suggests the poor performance of financial stocks has far more to do with broader economic worries than fears about the Dodd-Frank bill.
Asset managers have typically traded at higher multiples than investment banking-oriented companies, and that dynamic largely remains in place today. While both Goldman and BlackRock have sold off sharply in the past several weeks, BlackRock is still costs more than three times as much as Goldman on a price-to-earnings basis.
There is a compelling reason for that differential, however. Managing other people's money is a great business -- with high margins, and steady fee income. Retail investors are scared, and have pulled out of the market. If a sustainable bull market returns, however, asset managers may be better positioned than investment banks to take advantage of it.
Written by Dan Freed in New York