In the last couple of months, two investment management firms have been discussed on this site as potential value ideas, Janus and Artio. This is not a coincidence, as money management firms appear to be out of favour. Consider the assets under management (AUM) to market cap ratio of these managers over the last few years:
If this is a temporary phenomenon, investors may want to load up on these companies, taking advantage of the cheap prices while they can. But some might say that this is not temporary. An era of poor returns and competition from lower-cost products like ETFs could pose a permanent threat to the fees these firms traditionally generated from their AUM. If they can't get the revenues from AUM that they used to, maybe they aren't worth as much of AUM as they used to be either.
These arguments are laid out by Alice Shroeder in this Bloomberg piece. Judge for yourself: is this a temporary or permanent decline for this industry?