Santoli: Shares of big fund companies now on sale

Traders work on the floor of the New York Stock Exchange.
Brendan McDermid | Reuters
Traders work on the floor of the New York Stock Exchange.

Fund managers who pick stocks for a living have soured on their own business.

This doesn't mean professional investors dislike their jobs, though in these dicey markets, they might. Rather, they're shunning the shares of asset-management companies, which have shed anywhere from one-sixth to half their value in the past year, with most of the damage coming since last summer.

The punishing sell-off in the sector owes to a worrisome mix of unstable financial markets, weak investor flows into funds and a broad shift toward lower-cost index-tracking products.

The one-year declines range from 16 percent for the largest, sturdiest franchises such as BlackRock and T. Rowe Price to 33 percent for more globally exposed managers Invesco and Franklin Resources to 50 percent for smaller firms with stiffer business challenges, namely Legg Mason and Waddell & Reed Financial.

As a result, though, these companies now appear inexpensive based on long-term valuation measures, and could offer an attractive opportunity for investors willing to bet that global markets won't face a 2008-style washout.

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