Fund managers and exchanges are likely to emerge from the Covid-19 crisis as the best relative performers compared to other financial services companies, a UK broker’s report claimed.
FinnCap Group said high recurring revenues, economies of scale and an increasing interest in active fund management following the crash will benefit the funds sector.
After FTSE All-Share index fell 26.6% in the first three months of the year, fund managers experienced the most robust rebound, gaining 41%, the report shows.
Separate data from Ernst & Young (EY) reveals that 31 UK-listed financial services firms have issued profit warnings due to the coronavirus in 2020. The majority of which came from lenders whereas the second highest number came from the asset management and non-life insurance industries, with six warnings each in the first four months of the year.
Tom Groom, UK head of financial services transaction advisory services at EY, said financial services firms entered the crisis in a position of capital strength due to significant reserves built up since the last crisis.
Nik Lysiuk, equity research analyst at finnCap Group, said: “Although we do not yet know the full economic impact Covid-19 will have, [the finnCap] report indicates that fund managers and exchanges will be the relative winners within financial services with the sector is also well-positioned to bounce back.”
FinnCap’s “top picks” include Impax Asset Management and Liontrust.
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