3 Investment Management Stocks to Buy as Industry Gains Momentum

Industry Overview - The Zacks Investment Management industry is composed of companies managing securities and funds to meet specific investment goals, earning revenue through service fees or commissions [3] - Investment managers provide diversification options, helping to reduce volatility impacts and ensure steady returns over time [3] Major Themes Affecting the Industry - Rising asset inflows are expected to support AUM growth, driven by impressive equity market performance and falling interest rates, leading investors to shift towards higher-yielding assets [4] - The trend towards passive investing continues, with investors moving to low-cost options like index funds and ETFs, although demand for active ETFs is rising [5][6] - Tighter regulations and rising compliance costs are anticipated to strain profitability, while technology upgrades may increase expenses in the short term but support long-term operational efficiencies [7] Industry Performance - The Zacks Investment Management industry has outperformed the S&P 500 and the broader finance sector over the past two years, with a collective stock increase of 65.9% compared to 52.5% for the S&P 500 and 41.4% for the Zacks Finance Sector [11] - The industry currently has a trailing 12-month price-to-tangible book (P/TB) ratio of 5.18X, significantly lower than the S&P 500's 14.79X, indicating a discount compared to the market [14] Investment Opportunities - SEI Investments: With a market cap of $11.1 billion and AUM of $493.9 billion, SEI is expected to benefit from revenue growth due to global presence and diverse offerings. The stock has gained 28.3% over the past three months [20][22] - Invesco: Operating with AUM of $1.8 trillion, Invesco's strategic expansion and efforts to improve efficiency are expected to support profitability. The stock has increased by 15% over the past three months [24][26] - Artisan Partners: With AUM of $167.8 billion, Artisan focuses on high-value-added active strategies. The stock has gained 18% over the past three months, supported by improving market trends [28][29]