We recently published a list of 10 Cheap Asset Management Stocks to Buy Now. In this article, we are going to take a look at where Raymond James Financial Inc. (NYSE:RJF) stands against other cheap asset management stocks to buy now.
The asset management industry plays a crucial role in global financial markets by managing investments for individuals, institutions, and corporations. Asset managers strategically allocate capital across equities, fixed income, real estate, and alternative investments, seeking to optimize returns while managing risk. The industry encompasses various segments, including mutual funds, hedge funds, private equity firms, and wealth management companies, each catering to different investor needs.
Recent research highlights the industry’s robust growth trajectory. According to PwC’s November 2024 Asset & Wealth Management Report, global assets under management (AUM) are expected to reach $171 trillion by 2028, reflecting a 5.9% compound annual growth rate (CAGR). Alternative assets, including private equity, hedge funds, and real estate, are projected to expand at an even faster 6.7% CAGR, reaching $27.6 trillion over the same period. As asset managers seek new growth avenues, tokenization is emerging as a transformative trend. PwC anticipates tokenized products will surge from $40 billion to over $317 billion by 2028, a 51% CAGR, as asset managers—particularly in private equity (53%), equity (46%), and hedge funds (44%)—embrace this innovation to democratize finance and lower investment barriers.
Amid these structural shifts, Deloitte’s 2025 Investment Management Outlook underscores the challenges firms face despite rising AUM in 2023. Revenue growth and profit margins remain under pressure, pushing firms to refine their product diversification strategies and distribution models. Key growth drivers include alternative investments like private credit and hybrid fund structures, as well as AI-driven sales and distribution technologies. Deloitte emphasizes that firms effectively implementing these initiatives will likely outperform competitors, while those failing to adapt may struggle to maintain their market position.
Another notable industry trend, according to Deloitte’s report, is the continued rise of exchange-traded funds (ETFs). Over the past five years, ETFs have attracted over $3 trillion in net inflows in the U.S., reflecting investors’ preference for low-cost, transparent investment vehicles. The majority of AUM in mutual funds and ETFs is concentrated in funds with lower expense ratios, contributing to ETFs’ growing market share at the expense of mutual funds. In 2023, active equity and bond ETFs maintained lower average expense ratios than their actively managed mutual fund counterparts, solidifying their appeal as cost-effective investment options.
In summary, the asset management industry is undergoing a period of transformation, driven by technological advancements, evolving investor preferences, and a shift toward alternative investments. While rising AUM signals strong long-term growth prospects, firms must adapt to shifting market dynamics by embracing diversified product strategies, AI integration, and tokenization.
Our Methodology
To determine the 10 cheap asset management stocks to buy now, we first compiled a list of asset management companies using online screeners and financial media reports. We then narrowed down the selection to stocks trading at a forward price-to-earnings (P/E) ratio below 15 and offering at least 10% upside potential. From this refined list, we further narrowed down 10 top stocks with the highest hedge fund ownership, utilizing data from Insider Monkey’s Q4 2024 hedge fund database. Finally, we ranked the selected stocks in ascending order of their forward P/E ratios, placing those with the lowest valuations at the top.
Note: All pricing data is as of market close on March 19.
Why are we interested in the stocks that hedge funds pile into? The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 373.4% since May 2014, beating its benchmark by 218 percentage points (see more details here).
An investor sitting at a desk looking through financial documents, representing the private client group.
Raymond James Financial Inc. (NYSE:RJF)
Forward P/E: 13.3
Upside Potential: 21%
Number of Hedge Fund Holders: 38
Raymond James Financial Inc. (NYSE:RJF) is a diversified financial services firm offering wealth management, capital markets, asset management, banking, and other services to individuals, corporations, and institutions. The firm’s total client assets are valued at $1.58 trillion.
As of February 28, 2025, the company’s assets under administration (AUA) were $1.58 trillion, reflecting a 12% year-over-year (YoY) increase. However, AUA experienced a 1% decline compared to January, primarily due to weaker equity markets in February, which was partially offset by modest net inflows.
Raymond James Financial Inc. (NYSE:RJF) announced its first-quarter 2025 results (FY ending in September) in January, reporting a 17% YoY growth in net revenue, which also rose 2% sequentially to $3.5 billion. The firm recorded an adjusted net income of $614 million, or $2.93 per share, marking a strong 22% YoY increase. Furthermore, the company’s financial performance saw improvement during the quarter, with its adjusted annualized return on tangible common equity (ROTCE) reaching 24.6%, compared to 23.8% in the same quarter of the previous year.
Following these strong Q1 results, BofA analyst Mark McLaughlin reaffirmed his Buy rating on the stock and raised the price target from $198 to $201. In addition to the robust quarterly performance, his optimistic outlook was supported by slightly higher capital markets revenue and net interest income. Consequently, the analyst increased his EPS projections for Q2, FY 2026, and FY 2027.
Overall, RJF ranks 10th on our list of cheap asset management stocks to buy now. While we acknowledge the potential of RJF to grow, our conviction lies in the belief that AI stocks hold greater promise for delivering higher returns and doing so within a shorter time frame. If you are looking for an AI stock that is more promising than RJF but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
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Disclosure: None. This article is originally published at Insider Monkey.
