After a European roadshow incorporating over 90 investor meetings, analysts at investment bank Jefferies have prepared their top picks among asset and wealth managers. Among the former, it seems that traditional houses are out of favour, especially in the UK, as alternative asset managers seem to be the popular choice.
There were some exceptions, investors seem to be impressed with European titan Amundi and its M&A strategy. The firm made a major incursion into Spanish markets recently with the acquisition of Sabadell Asset Management last month, adding over EUR 20 billion to Europe’s largest asset manager’s AUM. Investors are hopeful that Amundi will keep on the acquisition trail with some hoping that Lyxor might be next on chief executive Yves Perrier’s target list.
Analysts at Jefferies said: “we think a combination of strong organic flows, improving unit linked volumes and scope for further M&A in the near-term will continue to drive share price performance in 2020 [for Amundi]”.
UK-based alternative manager Intermediate Capital also got a ‘buy’ rating from analysts. Jefferies made the stark statement this private debt specialist is the only UK asset manager it covers with “whose fees have been rising in some strategies recently”. It did sound a note of caution over the group with a mention that its ability to deploy AUM at sustained rates of return “must diminish over time” coupled with the fact its share price has been in decline recently.
Private capital specialist Partners Group was another alternative asset manager highlighted as a 'buy', partly due to its ‘extremely rare’ quality of transitioning from high growth to value compounder. The firm which has $94 billion in AUM, is favoured by investors as its viewed as being best placed to benefit from the emerging defined contribution pension space. Jeffyries’ analysts added as one bear point on the stock ‘investors wondering what they need to worry about’, so a definite ‘buy’ in their view.
Coverage of the UK wealth management sector was not as defined as that of asset managers, with analysts pointing out that there seems to be a tendency towards Brewin Dolphin compared to Rathbones with debate centred on top line growth.
