Groups' high cash balances affecting returns, says report

Larger asset management companies are driving down returns for shareholders by holding exceptionally high cash levels on balance sheets, according to a study.

Groups listed in the UK are urged to consider putting their cash to work and look at other ways of protecting their businesses from volatile markets in order to improve return on equity for shareholders.   The study was carried out by Absolute Partners, a consulting firm set up by ex-Quantum Asset Management CEO Mark Mathias, looking at UK-listed asset managers with a three-year plus history.   It concludes that most managers are not efficient users of capital, producing much lower returns on equity than expected and calls cash balances so high that the ratio of revenue to reali...