Fitch Ratings has taken ratings actions on certain traditional investment managers as part of its recently completed global peer review.
The rating agency has affirmed the long-term issuer default ratings of Aberdeen Asset Management Plc at A, Amundi Group at A+, Azimut Holding SpA at BBB, FMR LLC at A+, Invesco Ltd. at A-, Janus Henderson Group Plc at BBB, Man Strategic Holdings Ltd. at BBB+, Russell Investments at BB and Schroders Plc at A+.
The rating agency revised Invesco's outlook to stable from positive and maintained Janus Henderson's outlook at positive and Russell Investments' outlook at negative. The outlooks for the remaining traditional investment managers are stable.
The rationale for the ratings actions includes both peer-group and company-specific considerations. Fitch noted that the peer group shared rating drivers like well-established and increasingly diversified franchises, adequate asset performance, stable profitability and relatively strong cash flow leverage metrics.
The active investment management industry continues to experience competitive pressures as investors increasingly prefer passive investment management strategies. Additionally, the investment management industry could be facing diverging regulatory paths as new administrations take office in the U.S. and France and the U.K. works on exiting the European Union.
Nevertheless, the rating agency said traditional investment managers' scale, focus on growing assets under management in the higher-yielding retail channel, and fairly variable cost structures continue to help them generate strong operating margins despite increasing compliance costs and fee pressure from investors' shift to passively managed products.