Raymond James Stock And Other Asset Managers Tied To Rising Cash Demand

Bond markets have just yanked yields on long term Treasuries to multi year highs, and that is pulling investor attention back to simple ideas like cash, liquidity and short term fixed income. When borrowing costs rise and inflation worries linger, money can move quickly. This article explores how that shift could affect three global asset manager stocks tied to money market and cash style products, and why their exposure to this news matters for your portfolio.

The stocks in the list below are just a sample, and the full screen surfaced 19 more global asset managers and money market players with equally compelling cash and short term fixed income stories that are not covered here. To go straight to the full Global Asset Managers and Money-Market Fund Providers Benefiting from a Shift into Cash and Short-Term Fixed Income results, use the Global Asset Managers and Money-Market Fund Providers Benefiting from a Shift into Cash and Short-Term Fixed Income screener to identify, filter and analyze the ideas that fit your own highest conviction view.

Raymond James Financial (RJF)

Overview: Raymond James Financial is a diversified financial services company that helps individuals, institutions and municipalities manage money through a large private client advisory network, asset management, capital markets and a bank. For investors focused on cash, money market style and short duration fixed income exposure, its wealth and asset management platform gives it multiple ways to collect and manage client liquidity when portfolios shift to safer options.

Operations: Raymond James Financial generates most of its revenue from the Private Client Group at about US$11.1b, with additional contributions from its Bank segment at roughly US$1.9b, Capital Markets at about US$1.8b and Asset Management at around US$1.3b. Revenue is largely driven by clients in the United States at about US$14.0b, with smaller contributions from Canada and Europe.

Market Cap: US$34.5b

Raymond James Financial provides exposure to the growing focus on cash and short term fixed income through a large private client and asset management franchise that can channel client money into money market style and short duration products when risk appetite cools. The company combines this with a sizeable bank and capital markets arm, which can help it respond to changing rate conditions and client demand for yield, while recent advisor recruitment and acquisitions expand its reach. At the same time, insider selling, execution risk around technology investments and pressure on some fixed income activities are reminders to watch how effectively management turns its scale into durable earnings tied to liquidity products.

Raymond James Financial is quietly becoming a liquidity hub as investors refocus on cash and short term fixed income. To see how that story connects to its balance sheet strength and capital flexibility, review the Raymond James Financial financial health report

Build your own cash and liquidity shortlist

Raymond James Financial and the two other stocks in this list all came from a single screener, but the real edge is shaping filters around your own view on cash, liquidity and balance sheet strength. Use our flexible Screener to mix valuation, growth, risk and dividend criteria, or tap into our curated Investing Ideas for ready made shortlists built around clear themes.

Ashmore Group (LSE:ASHM)

Overview: Ashmore Group is a London based investment manager that runs equity and fixed income funds for retail and institutional clients, with a clear focus on emerging markets and mandates that span external debt, local currency bonds, corporate debt and liquidity themed portfolios. For investors interested in a shift toward cash and short duration fixed income, Ashmore Group sits at the crossroads of higher yielding emerging market debt and more conservative, capital preservation led bond strategies.

Operations: Ashmore Group generates about £132.4 million in revenue from the provision of investment management services, with around £86.8 million coming from clients in the United Kingdom and Ireland and the rest mainly from the Americas, Asia and the Middle East.

Market Cap: £1.5b

Rising global bond yields and pressure on long duration equities are pushing more investors toward capital preservation, which is where Ashmore Group can come into focus given its fixed income and liquidity related mandates in emerging markets. The company combines this with high reported margins and long tenured management, yet faces questions around forecast earnings declines, weaker dividend cover and a balance sheet that leans on external funding rather than deposits. If you are weighing whether the current P/E discount and exposure to higher yielding emerging market bonds compensate for those risks, Ashmore Group is a company that may warrant a closer look at how resilient its cash generation is when flows rotate toward safer, shorter duration assets.

Ashmore Group’s emerging market income story can appear overshadowed by questions about earnings and dividend cover, yet the full picture is more nuanced. Walk through the 3 key rewards and 4 important warning signs (3 are major!) to see what the headline numbers might be masking

TP ICAP Group (LSE:TCAP)

Overview: TP ICAP Group is a global interdealer broker that connects banks, asset managers and other institutions so they can trade interest rate products, bonds, foreign exchange, money markets and related instruments, including very short term fixed income. For investors watching the shift into cash and short duration products, TP ICAP Group is one of the companies in the plumbing of the market where higher trading volumes in liquid, short term instruments can directly translate into more broking and data activity.

Operations: TP ICAP Group generates most of its revenue from Global Broking at about £1.4b, with additional contributions from Energy & Commodities at roughly £444 million, Liquidnet at around £364 million and Parameta Solutions at about £204 million.

Market Cap: £2.4b

Investors looking at cash and short term fixed income may wish to watch TP ICAP Group closely, because it is a large broker in rates and money markets where higher volatility and rising yields can lift trading volumes in short maturity instruments. The company combines that with electronic platforms and a data arm that sells recurring information services, which can support earnings quality even when individual trading days are quieter. At the same time, a high fixed cost base, a recent one off loss of £87 million and reliance on external funding rather than deposits mean that funding costs and execution on its technology plans are important factors. For those seeking exposure to the mechanics of liquidity and bond trading rather than the funds that hold the bonds, TP ICAP Group is one potential starting point.

TP ICAP Group’s role in the mechanics of rates and money markets can make its story look like pure volume and volatility. The real twist sits in the evolving mix of broking, platforms and data inside the 4 key rewards and 2 important warning signs

Seeking Alternatives Before The Crowd Moves

Fresh ideas move fast. Some stocks are building breakout momentum, others are dropping back to better entry points and many stay under the radar for now. Consider taking a closer look.

• Explore potential early momentum shifts by scanning hand picked companies in the 50 high quality undervalued stocks before prices reflect improving fundamentals and the crowd fully catches on.
• Review curated businesses in the 39 power grid technology and infrastructure stocks to evaluate opportunities related to infrastructure demand while attention is still elsewhere and valuations can lag the story.
• Assess possible cash generative compounding by checking companies in the 11 dividend fortresses while yields and balance sheet strength still appear compelling to some investors.

This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

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