Asset managers had a poor 2022: the S&P Composite 1500 Asset Management Index was down 22% and, according to the Investment Company Institute (ICI), worldwide mutual funds fell by 20%, from $76tr to $60tr. When bond and equity markets fall, the results are unlikely to be pretty: with revenues trending down and multiples contracting, there is a double whammy to contend with. So how do valuations shape up now, after a bullish start to the new year? The first chart is my favourite chart of asset manager valuations – it has so much information in it. The x-axis is the EBITDA as a percentage of assets under management (AuM), and the y-axis is the market cap as a percentage of AuM. Thus, a line drawn from the intercept out is the market cap/EBITDA ratio. There are 20 companies represented on the chart, which we can group into three categories: asset managers, platforms and wealth managers. But even as one group, the line of best fit has a correlation coefficient of 0.92, and its gradient is a market cap/EBITDA of 10.8x. Download the full report to read more