October 23, 2015 / 1:31 AM / 4 years ago

Shares of large U.S. asset managers rise despite tough quarter

BOSTON, Oct 22 (Reuters) - Large U.S. asset managers’ shares rose on Thursday despite outflows and profit declines in the latest quarter, which analysts said were offset by other details in their earnings reports that covered a period of choppy markets during the three months ended Sept. 30.

Shares in Janus Capital Group of Denver and T. Rowe Price Group of Baltimore both rose more than 6.5 percent on Thursday, while Franklin Resources Inc of San Mateo, California, was up 5 percent.

It was the biggest one-day percentage gain for Janus since January and the biggest for Franklin Resources and T. Rowe Price in roughly four years.

The companies each reported net withdrawals of cash by investors during the quarter. These included $28.6 billion of net new outflows at Franklin Resources, driven by withdrawals from its well-known global bond funds that have suffered poor performance.

The companies are all under pressure from the broad shift of money to low-fee passive vehicles like index funds, and the three stocks remain in negative territory for 2015 so far.

But the companies each reported offsetting news such as continued share buybacks and improved investment performance, enough to raise their share prices on the day, analysts said. Those factors were important since volatile markets during the three months ended September 30 could have spelled even more problems for the asset managers, whose fortunes are tied to public financial attitudes.

“Investors may have looked at these things and judged the worst is over,” said Morningstar analyst Greggory Warren.

Janus Capital of Denver said net income fell by half to $19.9 million for the quarter on the early retirement of debt.

T. Rowe Price of Baltimore said quarterly net income fell 9 percent on higher compensation costs compared with the same period a year ago. But the firm’s net outflows of less than $1 billion were seen by analysts as a positive sign.

Franklin Resources said net income fell 44 percent to $358.2 million. During the quarter assets under management fell 11 percent to $770.9 billion at Sept 30 due to the outflows and to $61.2 billion of market depreciation. Share repurchases and cost-cutting helped the shares up despite those factors, analysts said.

Reporting by Ross Kerber; Editing by Diane Craft

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