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What: Shares of Affiliated Managers Group (AMG 0.20%) were down by more than 10% at 2:45 p.m. EDT on Friday as the company joins a larger sell-off in asset management stocks.
So what: Shares of asset management companies are trading down universally. From private equity titans like Blackstone (BX) to mutual fund manager T. Rowe Price (TROW 0.01%), both of which are down about 5% today, no company is safe in an industrywide sell-off.
It's not all that surprising that Affiliated Managers Group, which is best described as a holding company of stakes in smaller asset managers, would follow in the footsteps of a general market decline. Falling asset prices result in fewer assets under management -- and a natural decline in management fees as a result.
Notably, Affiliated Managers Group is more exposed to global markets than most, and it has greater financial ties to markets roiled by the surprising Brexit vote. At the end of 2015, about 39% of its assets under management were in global stocks.
Now what: Investing in asset managers requires a stomach for volatility, as the industry's profits typically grow at multiples of the rise or fall in asset prices. Over long periods of time, though, many of the industry's largest companies have been some of the market's best-performing stocks.
Though a Brexit-related rout may lead to short-term outflows, and almost certainly AUM declines as a result of market movements, over the long haul, quality companies should be able to grow assets by stealing market share and riding a favorable tide of rising asset prices over time.
Affiliated Managers Group has stakes in a stable of quality managers that include the likes of Tweedy, Browne, and ValueAct. Today's drop seems to have more to do with markets than a fundamental change in the business.
