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Stock Strategist Industry Reports

Our Top Two Picks in the Asset Management Industry

BlackRock and Invesco are well-positioned to navigate turbulent markets.

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With global stock markets up more than 50% since their bear market lows in March 2009, most of the asset managers we cover are in much better shape than they were just a year ago. Higher average assets under management, or AUM, have allowed many firms to return to revenue and profitability levels not seen since before the bear market.

That said, there remains the risk that some asset managers, especially those with a majority of their AUM in equities, could underperform this year if the markets head lower. The main reason for this is that almost all of the gains that have been seen in equity AUM over the last year have come from market appreciation as opposed to investor inflows. With most retail investors viewing stocks as being "too risky to invest in" (according to a recent survey conducted by  Franklin Resources (BEN)), inflows into stock funds have been difficult to come by. That's not to say there haven't been inflows, because there have been periods where sales have been outpacing redemptions. It's just that the majority of these inflows have been concentrated with firms--like  BlackRock (BLK),  Invesco (IVZ), and  T. Rowe Price (TROW)--that have not only had solid relative fund performance, but have done a better job of selling their fund offerings.

Greggory Warren does not own (actual or beneficial) shares in any of the securities mentioned above. Find out about Morningstar’s editorial policies.