One of the biggest beneficiaries from the bull run last year were traditional investment management companies such as BlackRock (BLK 0.36%), Franklin Resources (BEN 0.52%), and Legg Mason (LM).

Not only did investment management companies see their assets under management surge in 2013, they also saw a sharp rise in their shares. Although equity markets have been off to a slow start this year, I think the bull run will continue. This would mean another solid year for investment management companies.

Strong performance in 2013
All three major indexes in the U.S. surged last year. In addition, the Nikkei 225 Index in Japan surged more than 50% in 2013 as the Bank of Japan introduced measures to fight deflation and low growth. Markets in Europe also performed well, with the MSCI Europe index gaining more than 25%. On the back of these soaring indexes, investors poured money into equity markets, and investment management companies saw a sharp rise in their assets under management.

In December, Legg Mason reported that its total assets under management stood at nearly $675 billion at the end of November 30, 2013. That was up from nearly $670 billion reported at the end of the previous month. The asset manager had said that its positive long-term flows were driven by equity inflows and slight fixed income inflows.

Franklin Resources recently reported that its assets under management at the end of 2013 stood at $879.1 billion, up from $781.8 billion reported at the end of 2012. The company's total equity assets under management rose from $303.4 billion at the end of 2012 to $365.7 billion at the end of last year. 

BlackRock's assets under management crossed the $4 trillion mark at the end of the third quarter of 2013. 

More assets under management means more fees for investment management companies, which ultimately boosts the bottom line. Not surprisingly, shares of investment management companies surged last year. BlackRock shares gained more than 53% in 2013, outperforming the S&P 500. Legg Mason and Franklin Resources also outperformed the S&P 500, gaining more than 69% and 38%, respectively.

The big question is whether investment management companies can expect another solid year in 2014. The answer depends to a large extent on how equity markets perform this year.

Equity markets to do well
Although equities have been off to a slow start this year, I expect the bull run to continue in 2014. If the rally in equity market in 2013 was driven by the Federal Reserve's bond purchase program and ultra-loose monetary policy measures from other developed world central banks, the rally this year will be driven more by fundamentals.

Despite December's disappointing jobs data, the U.S. economy has been recovering. The outlook for the eurozone has also improved significantly in recent months. Earlier this week, Ireland returned to the bond market after exiting its bailout program last month. Another troubled eurozone economy, Portugal, has seen a drop in its borrowing costs. Meanwhile, recent economic data from the eurozone has also been encouraging. While the economic recovery in the eurozone is still in nascent stages, recent developments have boosted investors' confidence.

The improved global economic outlook has also encouraged U.S. companies to boost capital spending. Since the financial crisis, companies have been driving earnings growth through cost-cutting measures and have refrained from investment. However, several companies have recently announced plans to boost investment. Of course, this would have a positive impact on the bottom line in the future. Also, one can expect an increase in M&A activity in 2014, given the improved economic outlook and the fact that companies are sitting on huge cash piles.

Given these factors, I expect equity markets to continue to do well in 2014. This should mean another good year for investment management companies.