3 Stocks to Bet on From the Prospering Investment Management Industry

Industry Overview - The Zacks Investment Management industry is experiencing growth driven by asset growth, digital transformation, evolving investment vehicles, deeper personalization, and strategic scale [1] - The industry consists of companies managing securities and funds for clients, earning revenue through service fees or commissions [3] Investment Trends - Asset inflows are expected to continue driving growth in assets under management (AUM), with institutional interest increasing from pension funds, endowments, and insurers [4] - There is a notable rise in inflows into alternative investments, including index funds, private credit funds, and ETFs, alongside growing interest in tokenized assets [5] - The industry is witnessing ongoing mergers and partnerships to enhance scale, reduce costs, and improve resilience [6][7] Financial Performance - The Zacks Investment Management industry has outperformed the S&P 500 Index and the broader finance sector, with a collective stock increase of 58.5% over the past two years [13] - The industry's current trailing 12-month price-to-tangible book ratio (P/TB) is 4.64X, indicating a significant discount compared to the S&P 500's 12.98X [17] Company Highlights - T. Rowe Price Group, Inc. (TROW): As of June 30, 2025, TROW had $1.68 trillion in AUM, with a CAGR of 2.3% over the past four years. The company is focusing on expanding its business through partnerships and acquisitions [24][27][28] - SEI Investments Company (SEIC): SEIC reported $517.5 billion in AUM as of June 30, 2025, with a CAGR of 8.2% over the past five years. The company is enhancing its technology and expanding its global presence through strategic acquisitions [32][33][36] - Federated Hermes, Inc. (FHI): FHI had $845.7 billion in AUM as of June 30, 2025, with a CAGR of 7.4% over the past four years. The company is actively seeking alliances and acquisitions to drive AUM growth [40][42]