With asset managers' margins climbing above pre-crisis levels, can firms continue to exercise fiscal self-restraint? That's one question that jumps to mind when perusing newly released numbers from New York research and consulting firm kasina.

During the fourth quarter of 2010, industry operating margins improved from 27.5 percent to 31.4 percent compared to the fourth quarter of 2009. Net margins went up from 21.2 percent to 23.4 percent. This means that asset management firms are in better shape now than they were in 2007 and 2008. The increase was driven by a combination of the stock market rebound and belt-tightening by asset managers.

kasina arrived at the numbers by looking at the earnings results of 17 publicly-traded asset management firms.

Franklin Templeton and BlackRock have the highest margins among the large firms. As for the smaller firms, Pzena Investment Management and Calamos Investments led the list.

"People weren't expecting the crisis," said Eric Daugherty, kasina principal and director of research, in an interview. "Margins took a nose dive, but firms quickly reacted and tightened their belts."

Now, with margins better than they were in 2007, "can firms maintain some level of fiscal discipline if the market continues to be stable or rise?" he added.

Asset managers these days are cautiously optimistic, Daugherty noted. "The challenge is if we have another market in 2011 like we saw in 2010, in which it was up 10-plus percent. We might see some firms go back to more inflated budgets." 

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