Halister News

(Bloomberg) -- A wave of big-scale asset manager M&A is on its way, both in Europe and the U.S., as companies face distribution difficulties, escalating fee pressure, new regulation and weak organic growth prospects, Morgan Stanley analyst Michael Cyprys wrote in a note.

• Expects revenues to fall ~3% over the next 3 years as AUM growth fails to offset margin and fee compression; sees fee rates dropping 10%-15% in base case and more than 25% in bear case
• Expects large international companies to continue reducing number of providers and products
• Expects more changes from MiFID II and DOL implications; asset managers could go direct-to-consumer, but they would need scale and brand awareness
• For investors, niche business models like ETFs, quant & CTA, EM debt, multi-affiliate models and alternative asset managers are a “way to play”
• NOTE: Earlier, Rock Star Era at Risk for Wall Street Analysts Facing Fee Reform
• NOTE: March 16, Franklin, T. Rowe Exposed to Fee Pressure, Morgan Stanley Says