The non-taper could deal a hit to broker-dealers in the short term, says Citi's William Katz, as their business models are leveraged to higher rates, and nice recent runs by the stocks may have priced in a taper. A longer delay in the commencement of the taper would "materially impact" the time it takes before they reach normalized earnings.
At the margin, Katz likes the fixed-income-centric managers as opposed to those focused on stocks. Invesco (IVZ +0.4%) remains a top pick, and Franklin Resources (BEN -0.8%) moves ahead of T. Rowe Price (TROW +2.4%) in his preferences. He also sees WisdomTree (WETF -1.7%) taking a hit as no taper may mean a weaker dollar/stronger yen, and uneven flows into its Japan Hedged Equity Fund (DXJ) - which makes up 35% of the firm's AUM (Note: The dollar is materially stronger against the yen today).
One group benefitting from lower rates could be alternative asset managers as lower rates mean lower financing costs. His favorites: Blackstone (BX +0.8%), Apollo Group (APO -0.9%), KKR (KKR +0.8%), and Och-ZIff (OZM +2.2%).
The iShares U.S. Broker-Dealers ETF (IAI -0.2%).