Goldman raises U.S. asset managers to attractive

(BestGrowthStock) – Goldman Sachs raised its view on U.S. asset managers to “attractive” from “neutral” on favorable cyclical trends for equity markets in the country and higher returns from dividends and buybacks next year.

The brokerage upgraded T. Rowe Price Group (TROW.O: ) to “buy” from “neutral” and added the company to its “conviction buy” list, citing the firm’s equity mix — which makes up for 73 percent of its assets under management, strong performance and reliable flow trends.

In a note to clients, Goldman said it expected a cyclical shift in 2011 of retail flows moving from bonds toward higher fee equities-oriented funds.

“We prefer gaining exposure to equities through alternative managers and institutional-focused firms, including Affiliated Managers Group, Blackstone, KKR & Co, and Fortress Investment Group,” Goldman said.

The brokerage also said it saw Franklin Resources (BEN.N: ), T. Rowe, and Waddell & Reed Financial (WDR.N: ) among the best positioned with the ability and willingness to redeploy cash flow in buybacks and dividends.

Separately, J.P. Morgan Securities said it saw the outlook for equity sales improving and raised its price target on several asset managers, including Federated Investors (FII.N: ), Pzena Investment Management (PZN.N: ), Janus Capital and T. Rowe.

JP Morgan said Invesco (IVZ.N: ) remained its top pick, gaining from better sales and benefits from the firm’s Van Kampen merger.

(Reporting by Brenton Cordeiro in Bangalore; Editing by Joyjeet Das)

Goldman raises U.S. asset managers to attractive