Quarter-End Insights

Financial Services: Value in Banking and Asset Management Firms

Michael Wong, CFA, CPA

The Morningstar Global Financial Services Index (Exhibit 1) has fallen 15% in 2018 through Dec. 20, underperforming the broader market because of moderating expectations for higher interest rates, which primarily affects banks and companies that earn interest on securities portfolios, and the general decrease in asset prices, which primarily affects companies that have fee-based assets, like asset managers and wealth management firms.

Exhibit 1: Lower rate expectations and asset prices are to blame

Michael Wong, CFA, CPA does not own shares in any of the securities mentioned above. Find out about Morningstar's editorial policies.