Average assets under management
Prudential Financial’s (PRU) Investment Management division generated adjusted operating income of $232 million in 1Q18, while in 1Q17 it was $196 million. The performance of this segment depends primarily on the average assets under management (or AUM), which are primarily affected by fluctuations in the markets.
A rise in the average AUM would help in boosting the Investment Management division’s fees, thus improving its performance. However, the performance of other investment management companies (XLF) like Blackstone (BX), BlackRock (BLK), and KKR (KKR) are also dependent on these base fees.
Prudential’s Investment Management division generated revenues of $826 million in 1Q18 compared to $756 million in 1Q17. The division’s total asset management fees rose to $633 million in 1Q18 from $575 million in 1Q17 mainly due to equity markets as well as net inflows in the fixed income asset class.
The investment management division’s total other related revenues rose from $58 million in 1Q17 to $73 million in 1Q18 thanks to transaction fees as well as strategic investing results. The company incurred expenses amounting to $594 million in 1Q18 compared to $560 million in 1Q17. Of the total asset management fees in 1Q18, institutional customers generated $296 million, while retail customers the generated $217 million.
The Investment Management division’s service, distribution, and other revenues amounted to $120 million in 1Q18 compared to $123 million in 1Q17. The performance of this segment largely depends on global factors that impact the markets, as these factors also impact the segment’s average AUM.