Falling yields put the squeeze on fund houses' bottom line in Q3

Shares feel the pressure as analysts cut earnings estimates

Falling yields have weighed on the bottom line of asset management companies (AMCs) during the quarter ended December 2021, prompting analysts to cut their earnings forecasts and price targets.

Three fund houses of the four listed AMCs have seen their net profit decline between 3 per cent and 18 per cent, despite healthy growth in revenue.

Newly listed Aditya Birla Sun Life AMC has managed to buck the trend with 27 per cent growth in profit. However, that was underpinned by a reversal of the employee stock option plan provision.

So what is putting pressure on profitability?

Regulatory changes, growth of low-yielding passive products,