Asset managers are feeling the pressure from the surging popularity of low-cost investment funds
Investing giants State Street Corp. STT 6.73% and BlackRock Inc. BLK -0.40% on Friday reported lower earnings in the second quarter, a period in which the Dow Jones Industrial Average ascended to a new record high and both firms posted inflows.
BlackRock, the world’s biggest money manager, said Friday that second-quarter investment and administrative fees fell by 1.4% from a year earlier even as the assets the firm manages jumped by more than $500 billion, to $6.84 trillion. State Street’s investment-management division followed suit with a revenue drop from a year earlier. In that same period, assets under management rose to $2.9 trillion from $2.7 trillion.
The results at State Street’s core asset-servicing businesses, which perform key back-office functions to some 90% of the biggest investment firms, underlined the tough terrain facing asset managers.“Nobody feels good about this industry—at all,” said Brennan Hawken, an analyst with UBS AG . “That’s not new. But it has really come home to roost in the past three to four years.”
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