Weaker markets, the rise of index funds and intense competition on fees create a potent mix for UK asset and wealth managers. The threat of inflation, war and market volatility led to savers and investors pulling £2.5bn from UK-domiciled retail funds in February, on top of outflows of £1.2bn in January. The share prices of several listed fund managers have suffered considerably, too.
However, this has led to a number of high-margin businesses trading at relatively low multiples. Add to that the possibility of further consolidation in the industry, and analysts at Panmure Gordon are bullish, with ‘Buy’ ratings on Abrdn (ABDN), Jupiter Fund Management (JUP) and Liontrust Asset Management (LIO), despite net outflows across all three companies in recent months – or years in some cases.
But while most asset managers are now trading on price/earnings ratios below their 10-year averages, according to Numis, it is not clear what events might trigger a share price surge.