Jan. 19 (Bloomberg) -- As a profit-making endeavor,
managing other people’s money is hard to beat. The business
requires very little invested capital. There are no worries
about getting paid in full when the bill comes due, since
fund managers control their customers’ money. And
lackluster performance is no bar to hefty profits because
fees, based on the dollar value of assets under management,
are paid even when returns are abysmal.
Wall Street, it often seems, is exempt from the laws
of economics. Most active money managers produce worse
returns than an index, such as the Standard & Poor’s 500.
But making enough money to look respectable to clients has
been relatively easy as long as falling interest rates
boosted the value of most asset classes.