Wall Street Transcript Interview with Jason Weyeneth, Lead Analyst at Sterne Agee & Leach, Inc.: Equity Headwinds and Waning Organic Growth Challenge Asset Management Sector

Wall Street Transcript

67 WALL STREET, New York - April 2, 2013 - The Wall Street Transcript has just published its Investment Banks and Asset Management Report offering a timely review of the sector to serious investors and industry executives. This special feature contains expert industry commentary through in-depth interviews with public company CEOs and Equity Analysts. The full issue is available by calling (212) 952-7433 or via The Wall Street Transcript Online.

Topics covered: Consistent BDC Dividend Yield - Private Middle Market Funding - Decreased Bank Loan Competition - Exchanges Trading Volumes and Cash Flow - Increase In Investor Risk Tolerance - Asset Growth - Capital Flow Into Equities - Fixed Income Bonds

Companies include: Waddell & Reed Financial Inc. (WDR), BlackRock, Inc. (BLK), Franklin Resources Inc. (BEN), Eaton Vance Corp. (EV), Federated Investors, Inc. (FII), The Blackstone Group (BX) and many more.

In the following excerpt from the Investment Banks and Asset Management Report, an expert analyst discusses the outlook for the sector for investors:

TWST: Your view is that you're not sure investors are rerisking just yet. What strategy are the majority of investors pursuing in this environment, and which of the asset managers are best positioned to serve current needs?

Mr. Weyeneth: I think financial advisers are doing their best to explain to clients the risks that the fixed income environment presents, particularly with regards to putting new money into the bonds funds right now. However, I think most retail investors, until they open up their account statements and see losses on their bond funds, are unlikely to reallocate back toward equities. I think the perception in most retail investors' minds is fixed income is less risky than equities, and they look back over the last four or five years, and they've generated very strong returns with bond funds. So until you start to see higher long-term interest rates driving losses in bond funds, I think the strategy that most retail investors are going to employ is going to be similar to what we've seen in the last few years with money continuing to flow into fixed income funds.

I think a name like Franklin Resources (BEN) is well-positioned in that environment as well as about any environment that I can think of, at least for the near term, for a few reasons. First, within fixed income, BEN is a leader in global bond products, which I believe are an attractive asset class given they are underowned by U.S. retail investors within fixed income allocations, and the strategies are generally lower duration, so there is less interest rate risk as global rates are set to rise.

Second, BEN is a very global franchise, so the firm is not entirely reliant on U.S. investors, and global investors often have a different mindset or are influenced by different factors than U.S. investors. And third, I think their equity platform is better positioned than the market perceives. They have a very sizable equity platform, they have generally good performance across that platform, and they have very strong distribution relationships, which I think would ...

For more of this interview and many others visit the Wall Street Transcript - a unique service for investors and industry researchers - providing fresh commentary and insight through verbatim interviews with CEOs, portfolio managers and research analysts. This special issue is available by calling (212) 952-7433 or via The Wall Street Transcript Online.

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