BOSTON Investors pulled billions of dollars out of several large asset managers in the third quarter, the firms said on Thursday, reflecting increasing caution among institutional clients.
Customers withdrew more money than they added for a variety of reasons among the firms, which include T. Rowe Price Group Inc, Franklin Resources Inc, Janus Capital Group Inc, and at Federated Investors Inc.
But taken together the flow patterns could mean institutional investors are growing more cautious after years of healthy markets, said Jason O'Connell, director of research for Boston Private Bank & Trust Co, which owns Franklin Resources shares.
"Institutions, after this run, may be pulling in the reins a little," he said.
Shares of T. Rowe Price fell 3 percent to close at $75.46 in trading on Thursday, while Franklin Resources rose less than 1 percent to close at $54.48. Janus rose 4 percent to close at $9.54 after the company's outflows were less than some analysts had expected. Federated reported results after trading ended.
T. Rowe Price Chief Executive Officer James Kennedy said his company's outflows partly reflected how some larger investors had stepped back from equity funds, despite good performance.
"What we're seeing is a number of institutions have been de-risking, repositioning to a more conservative stance," Kennedy said in an interview. "As they de-risk, we lose more."
In contrast, he said, individual investors have been moving money out of money market funds and into stock and bond funds, and continue to put money into retirement accounts.
"You have two different trends: institutions pulling in their horns and individuals stepping out on the risk curve," Kennedy said.
Gabelli & Co analyst Mac Sykes said volatile stock markets in recent months also helped drive the outflows, as did continued political uncertainty in Washington even before this month's debt-ceiling showdown. "The perceptions around Washington didn't help," Sykes said.
Analysts focus on flow data because asset managers' revenue and profits are closely tied to market indexes not under their control.
During the quarter, all the firms reported higher assets under management because market gains offset outflows.
T. Rowe Price of Baltimore reported assets under management of $647.2 billion at September 30. Market gains of $40.6 billion far exceeded net cash outflows $7.4 billion during the quarter.
Franklin Resources of San Mateo, California, reported total assets under management of $844.7 billion. Market gains of $33.1 billion offset outflows of $2.7 billion in the September quarter.
Janus Capital's assets under management were $166.7 billion, with market gains of $10.3 billion and net outflows of $4.2 billion from funds, excluding money funds. Unlike the two larger companies, Denver-based Janus has reported a long string of quarterly outflows tied to performance challenges.
Federated of Pittsburgh reported total assets of $366.7 billion at September 30, including $90.3 billion in stock and bond portfolios and the rest largely in money-market funds and separate accounts. Market gains added $2.4 billion to the stock and bond portfolios, but outflows from them totaled $863 million.
(Reporting by Ross Kerber; Editing by Lisa Von Ahn and Bob Burgdorfer)