Management companies increased their revenue from trust management services in the first quarter

The business of management companies (MCs) is actively recovering. According to the results of the first quarter, the revenue of the leading players increased by 16% year-on-year. However, the growth leaders turned out to be medium-sized management companies serving institutional and wealthy private investors. The positions of mid-level players are strengthening against the backdrop of a decrease in the marketing activity of competitors from key banking groups.

According to Kommersant’s estimate, based on the reports of the largest management companies (with revenue for 2022 over 200 million rubles) in January-March, they increased revenue from trust management services (DM): it amounted to almost 13 billion rubles, which 16% higher than in the first quarter of 2022.

The imposition of sanctions, the blocking of foreign assets of Russian investors, the withdrawal of non-residents, the restriction of access to Western infrastructure had a strong impact on the remote control market in 2022, which resulted in a decrease in players’ revenue (see Kommersant dated April 26). But the industry, notes Alfa Capital’s CFO Oleksandr Spisivy, quickly adapted. “The market has not lost confidence, only the interest has temporarily decreased. Now he is coming back – money management tasks have not gone anywhere, ”he explains.

However, there have been noticeable changes in the balance of power in the market. If, according to the results of the first quarter of 2022, the top five market companies accounted for more than 55% of revenue (6.1 billion rubles), then according to the results of the last quarter, it was already only 43.5% (5.6 billion rubles).

For these companies, with the exception of the Region Management Group, a significant part of the revenue is generated by the retail business, which turned out to be one of the most affected last year. As a result, most of them showed either a symbolic increase in the indicator, or a decrease by 12-29%. “The decrease in revenue was influenced by external factors: the weakening of the dollar, the shortfall in commissions for products with “frozen” assets, as well as a general decrease in remuneration of management companies against the backdrop of a stock market correction,” notes Mr. Spisivy.

The management company “First” noted that a positive result in terms of revenue dynamics was obtained by attracting funds from private investors in open mutual funds with the payment of intermediate income (see “Kommersant” dated March 9). In the first quarter, net investments in open mutual funds of the company amounted to about 10 billion rubles. Net inflow into exchange-traded mutual funds amounted to RUB 1.8 billion. At the same time, large management companies demonstrated a growth in revenue by tens of percent, a significant part of whose business is accounted for by institutional investors.

However, the growth leaders in the reporting period were small companies that serve both institutional and private investors. The revenue of such players grew two to three times over the quarter. In the UK FG, BCS and Loko-Invest Asset Management explained that the increase in revenue was facilitated by an increase in assets transferred to them for management by wealthy investors.

Daniil Apleev, General Director of Loko-Invest Asset Management, noted that over the past year, assets managed by the company have shown a two-fold increase with an increase in the number of clients by 45%. “Assets managed by management companies grew by 43% over the quarter, primarily due to the active development of services for wealthy clients, as well as due to the emergence of new high-yield management strategies,” said Andrei Vereshchagin.

Market participants are paying attention to noticeable changes in the competitive environment. “Against the background of sanctions risks, some players reduced their activity, but those that were on the sidelines became more active,” notes a top manager of a large management company. Director General of TKB Investment Partners Dmitry Timofeev draws attention to the fact that some large banking groups have significantly reduced their marketing activity, minimized their presence in the media, which is negatively perceived by customers. “In the current environment, it has become easier for companies with more modest marketing budgets to be more visible,” he notes.

In connection with the isolation of the Russian market, working conditions have become tougher for all Russian management companies, market participants admit. But such isolation “became the impetus for the formation of a new investment landscape,” notes Daniil Apleev, allowing us to count on the flow of capital from foreign banks and management companies to Russian players. Clients of the departed foreign banks are accustomed to a high level of service, they understand investment products well, Dmitry Timofeev clarifies, but if a Russian company can offer conditions no worse, then managers have a good chance of success.

Vitaly Gaidaev, Dmitry Ladygin