In 2021, More Consolidation Awaits the Asset Management Industry

The asset management space could be ripe for more mergers and acquisitions activity in 2021.

“On Feb. 18, just a day before the S&P 500 Index set a pre-pandemic record, Franklin Resources Inc. announced a deal to acquire asset manager Legg Mason Inc. for almost $4.5 billion, a move that would bring its combined assets under management to $1.5 trillion,” reports Brian Chappatta for Bloomberg.

It took a few months, but more deals appeared later in 2020. While it doesn’t have immediate or direct implications for actively managed exchange traded funds, Morgan Stanley’s $7 billion acquisition of mutual fund manager Eaton Vance underscores the point that active management is still desirable on multiple fronts.

Eaton Vance has some experience with actively managed exchange traded funds, previously listing some products under the NextShares label.

“Bringing in the Boston-based company’s more than $500 billion in assets meant Morgan Stanley Investment Management would manage about $1.2 trillion, finally reaching Chief Executive Officer James Gorman’s goal to join the $1 trillion club,” according to Bloomberg.

Mutual Funds and Active ETFs Come Together

A new generation of active ETFs are constructed similarly to flagship investment strategies that have served fund family clients well for decades, the active ETFs use the same portfolio managers as their corresponding mutual funds and employ the firm’s long-standing strategic investing approach, characterized by rigorous research, risk awareness, and independent decision-making.

More recently, reports surfaced State Street is mulling options for its asset management business, which includes the second-largest U.S. ETF issuer.

“State Street Corp. is exploring options for its asset-management business, reportedly evaluating combinations with Invesco and UBS Group AG. State Street Global Advisors has more than $3 trillion under management,” according to Bloomberg.

For more on active strategies, visit our Active ETFs Channel.

The opinions and forecasts expressed herein are solely those of Tom Lydon, and may not actually come to pass. Information on this site should not be used or construed as an offer to sell, a solicitation of an offer to buy, or a recommendation for any product.