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Rating:Healey Makes It Big. Expect More Indexed Love For AMG Not Rated 0.0 Email Routing List Email & Route  Print Print
Monday, June 30, 2014

Healey Makes It Big. Expect More Indexed Love For AMG

News summary by MFWire's editors

Sean Healey and his team can bust out the champagne yet again, this time to toast indexed investments. Wait, say what?

Last week S&P Dow Jones Indices moved Affiliated Manager Group [profile], a backer and acquirer of active asset managers (especially alternatives-focused shops), to the S&P 500 index, from the S&P MidCap 400 index. CNBC, TheStreet, and the Wall Street Journal all covered the switch.

The switch puts AMG (with a market cap around $11 billion) into the company of asset managers like BlackRock, Franklin Templeton, Invesco, Legg Mason, and T. Rowe Price, as well as other financial services giants like Ameriprise, BofA, BNY Mellon, Charles Schwab, Goldman Sachs, J.P. Morgan Chase, Morgan Stanley, Northern Trust, Principal Financial Group, Prudential Financial, State Street and Wells Fargo.

Current S&P MidCap 400 asset managers include Eaton Vance, Federated Investors, Janus, SEI ,and Waddell & Reed.

Thanks to the move into the S&P 500, alternatives- and active-management-focused AMG is rising to a whole new level when it comes to being invested in by passive investors. S&P Dow Jones Indices spokesman Dave Guarino confirms that, as of December 31, 2012 (the most recent data the index provider has), $94 billion in asset management products were directly linked to the S&P MidCap 400 that AMG is now leaving. The S&P 500, by comparison, is linked to a whopping $1.57 trillion asset management products (to say nothing of the trillions more benchmarked to the same index).

Not surprisingly, stocks in the S&P 500 are heavily held by indexers. David Blitzer, managing director and chairman of the index committee at S&P Dow Jones Indices, confirms that between 10 and 12 percent of each stock in the S&P 500 is held by index mutual funds and ETFs alone. Three to five percent of each stock in the MidCap 400 is held in a similar fashion, Blitzer adds, meaning that climbing into the S&P 500 correlates with a more than doubling of index funds' and ETFs' percentage ownership.

And those index funds and ETFs investing in the S&P 500-tracked stocks translates into at least a short term bump for stocks added to the index. Blizter estimates that, over the next several weeks, AMG will probably outperform the market. He expects AMG to then "give back" that outperformance over the next six months or so.

Watch for AMG, already a darling of analysts focused on the asset management industry, to get more ink from other analysts and journalists, thanks to the move.

"It will, to a small extent, increase the amount of attention the company gets," Blitzer tells MFWire.

So far, though, AMG's stock hasn't moved much. The stock closed at $201.56 on Tuesday, June 24, S&P Dow Jones Indices announced the changes after market close that day. By market close on Friday, June 27, AMG was up 0.44 percent to $202.45. (That's down 6.25 percent from the $216.88 that AMG was at on December 31 of last year.) Perhaps the S&P 500 index love is yet to come. Stay tuned. 

Edited by: Neil Anderson, Managing Editor

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