Fund houses lose money in billions due to slump in stock markets

By Charles Steines

Money managers are having trouble hanging on to money. Franklin Resources said on Wednesday that investors withdrew $20.6 billion in the fourth quarter, the latest asset manager to highlight the issue of redemptions. Affiliated Mangers Group said on Tuesday that it had outflows of $6.8 billion, while Waddell & Reed saw $5 billion in withdrawals, contributing to the biggest drop in its stock since the financial crisis of 2008.

Money managers are hurt by slumping stock markets worldwide, which have prompted investors to dump anything perceived as risky. The firms are getting squeezed by sovereign wealth funds in need of cash after oil plunged, and the shift by investors from active funds to cheaper ones. The preference for passive products and ETFs has created winners.