EUR 850.00 For Business Accounts Only

Morningstar | Organic growth and acquisitions will continue to fuel AMG's long-term growth.

AMG has generated solid annual organic growth (of 2.5% per year on average) during the past 10 calendar years, which the build-out of its global distribution network and the attractiveness of its product portfolio aided greatly. The increased volatility in the global equity markets has raised the hurdles to AMG's affiliates generating market-beating performance and consistent flows, but we continue to believe the firm is well-positioned to generate 1%-3% annual organic growth on average during the next five years. We base this on our belief that investors will continue to gravitate toward products with more lucrative return profiles (such as global/international equities and alternative assets), as well as low-cost passively managed products.With 39% of its AUM dedicated to alternative strategies and 12% in multi-asset products at the end of June, the firm is not as heavily exposed to the impact that passive investing has had on active equities. Additionally, its equity lineup (which accounted for 48% of total AUM) is diverse, composed of U.S. equities (14%), global/international equities (26%), and emerging-market equities (8%). The firm's relatively small exposure to the retail market (28% of total AUM), with product distribution more heavily weighted toward institutional (58% of AUM) and high net worth (14%) clients, also limits its exposure to the effects of the U.S. Department of Labor's fiduciary rule. AMG is more global than many of its peers as well, with more than half of its AUM sourced from clients residing outside the U.S.While AMG's investment/acquisition deal pipeline remains robust, which would normally give the firm a leg up in the industry consolidation we expect to see in the future, the market for boutique asset managers has become more competitive of late, and the runup of the market has stretched valuations, limiting the types and number of deals that AMG is willing to do. Absent additional investments in boutique asset managers, we expect the firm to dedicate its cash flows to pay down debt, repurchase shares and pay dividends.