The Zacks Investment Management industry, consisting of companies that manage securities and funds for clients to meet specified investment goals, has performed remarkably well this year. The industry has soared 37.6%, well above the S&P 500 Index’s return of 27.6%.
 

Image Source: Zacks Investment Research

Further, as the industry is currently ranked in the top 50% of Zacks Ranked Industries, we expect it to outperform the market over the next three to six months. As such, it is prudent to add some of the industry players like Janus Henderson Group plc (JHG Quick QuoteJHG - Free Report) , SEI Investments Co. (SEIC Quick QuoteSEIC - Free Report) and Victory Capital Holdings, Inc. (VCTR Quick QuoteVCTR - Free Report) to your portfolio for generating solid returns in 2025.

Investment Management Industry Catalysts for 2025

Equity markets globally have performed impressively in the past two years, driven by sustained economic growth. This resulted in solid assets under management (AUM) growth. With falling interest rates and the removal of election uncertainty in several regions, investors are likely to rotate out of money market mutual funds or short-term investments into other higher-yielding assets like equity funds, alternative assets and long-term bond funds. Also, deregulation is expected to open up the previously inaccessible retirement market. These factors are expected to drive AUM balance going forward.

Investors have been moving away from actively managed funds and toward low-cost passive investment options. With interest rates expected to go down in 2025, investors are likely to re-assess their risk levels, increasing asset inflows into equities and alternative investments, such as index funds and exchange-traded funds (ETFs). The demand for active ETFs that provide exposure to leveraged loans through collateralized loan strategies and/or popular and higher-performing sectors is rising. Another faster-growing area of investor interest is private credit funds. As the demand for such investment vehicles continues to increase, investment managers will be able to generate higher fees. 

Overall, solid economic growth and declining interest rates will keep driving inflows into the industry. Hence, investment management stocks are a viable investment option for 2025.

3 Investment Management Stocks to Consider for 2025

We used the Zacks Stock Screener to select the abovementioned three investment managers. These firms, with a Zacks Rank #1 (Strong Buy) or #2 (Buy), have soared more than 25% this year and are projected to record earnings growth in 2025. Also, the three asset managers have a market cap of $2 billion or more. You can see the complete list of today’s Zacks #1 Rank stocks here.

Let’s discuss these three stocks in detail.

Janus Henderson: Based in London, this is a leading global active asset manager dedicated to helping clients define and achieve superior financial outcomes through differentiated insights, disciplined investments and world-class service. As of Sept. 30, 2024, JHG had approximately $382.3 billion in AUM and offices in 24 cities worldwide. 

Janus Henderson has been witnessing consistent growth in the top line. Global presence, diverse product offerings, solid balance sheet, strategic acquisitions and robust AUM balance are expected to support financials. 

A robust liquidity position will keep JHG’s capital distributions sustainable.

JHG shares have surged 43.8% in the year-to-date period. The company’s earnings are expected to grow 30.8% and 12.1% in 2024 and 2025, respectively. Janus Henderson currently sports a Zacks Rank #1.
 

Image Source: Zacks Investment Research

SEI Investments: Headquartered in Oaks, PA, this asset management company, with a market cap of $10.9 billion, is a leading provider of wealth management business solutions in the financial services industry. As of Sept. 30, 2024, it had AUM worth $493.9 billion and client assets under administration of $1.05 trillion.

SEI Investments has been witnessing consistent improvement in revenues. Global presence, diverse product offerings, solid balance sheet, strategic buyouts and robust AUM balance are expected to keep driving revenues. 

Plans to expand inorganically, technological innovations and the rising demand for SEI Wealth Platform across financial institutions are expected to aid SEIC’s financials. A robust liquidity position will keep its capital distributions sustainable.

So far this year, SEIC shares have jumped 32.9%. The company’s earnings are expected to grow 27.8% and 11.1% in 2024 and 2025, respectively. SEIC currently carries a Zacks Rank #2.
 

Image Source: Zacks Investment Research

Victory Capital: San Antonio, TX-based asset manager offers investment advisory, fund administration, fund compliance, fund transfer agent, fund distribution and other management services globally. As of Sept. 30, 2024, it had AUM of $176.1 billion and total client assets of $181.1 billion.

VCTR employs a next-generation business strategy that combines boutique investment qualities with the benefits of a fully integrated, centralized operating and distribution platform. Driven by such a strategy, the company is witnessing steady revenue growth. 

Also, Victory Capital’s pending deal to acquire Amundi US business will fast-track “the globalization of our firm through a new global distribution channel.” The company’s enhanced capital distributions are sustainable, driven by a strong balance sheet and liquidity positions.

VCTR shares have skyrocketed 93.5% this year. The company’s earnings are expected to grow 17.3% and 19.2% in 2024 and 2025, respectively. Victory Capital currently sports a Zacks Rank #1.
 

Image Source: Zacks Investment Research