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Acquisitions. Speculation. Trend?

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Fund companies bulking up

Investors in fund companies have seen their investments outperform the market recently. Fund companies are getting bigger and bigger. Consolidation is the foundation for fund company stocks, and competition is pushing companies to bulk up. It’s about economies of scale and buying other fund managers that can complement holes in product lines.

Royal Bank will buy Blue Bay. KKR has bid for Perpetual. AGF wants Acuity. Bank of Nova Scotia signed to buy DundeeWealth. CI Financial is purchasing Hartford.

Dividend increases have also been stimulating conversation around the market. Some think Q1 is

Consolidation trend?

going to see further dividend increases. Will the trend in the fund sector of growing through acquisitions turn into growing dividends, too? In order to compete with other corporations, especially within the financial services sector, we may see fund companies increasing their dividends as well — especially if senior management thinks their business environment has stabilized.

Who’s next and will fund companies continue to outperform?

The Globe has a great chart in the following article showing dividend yields for fund company stocks.



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