Scaling up and ripping out shared costs.
The Wall Street Journal reports that the pressure on active fund managers has been unrelenting. With two big mergers already signed, there are signs that more deals are on the way.
Last year, investors yanked $396 billion out of active equity mutual funds, according to the Investment Company Institute, while they poured nearly the same amount into exchange-traded funds and index-tracking mutual funds. This has continued into 2017.
After years of waiting for active managers to put up big performance numbers and reverse the outflows, boards of directors and investors in public companies have to be thinking about next steps.
The two recent deals came in response to these pressures. In October, UK-based Henderson Group agreed to merge with US-based Janus Capital Group. Last week, Standard Life agreed to acquire Aberdeen Asset Management.
The Henderson-Janus deal has a clearer strategic rationale - the ability to distribute each other’s products across the Atlantic. The Standard Life-Aberdeen combination between two UK-based firms looks more like a straightforward attempt to scale up and rip out shared costs.
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