Eaton Vance experiences 'unusual uncertainty' entering 2012, CEO says

By Aleesia Forni

Columbus, Ohio, Nov. 22 - Eaton Vance Corp. will enter its fiscal 2012 with "unusual uncertainty" about the broader economic and market environment, along with its near-term business prospects.

The economy's maintenance of a stable growth trajectory amid the continuing European debt and U.S. governmental deficit challenges will be one of the main elements that determine what kind of year the company will have in 2012, according to chief executive officer Thomas E. Faust Jr.

"Although I don't have a crystal ball, I believe Eaton Vance continues to be well positioned for success," Faust said.

The S&P fell approximately 15% from the beginning of the quarter to the market bottom in early October, "erasing the entire previous year's gains," Faust said.

However, "quite remarkably," the markets reversed course with the S&P 500 closing October with one of its best months in recent decades.

"While rollercoaster rides can be entertaining at the amusement park, in the financial markets they present difficulty for active managers like Eaton Vance," Faust said.

Though the past fiscal year "certainly had its challenges," it was also a year of "significant achievement" for Eaton Vance.

The company reached new highs in terms of gross sales revenues, net income and earnings per share.

Eaton Vance reported record earnings of $2.00 of adjusted earnings per diluted share for the fiscal year ended Oct. 31.

However, the year ended with "more of a whimper than a bang" as volatile markets took their toll on the company's results in the fourth quarter.

Faust said that a question on many investors' minds is when the company will be able to get its organic growth "back on track and run closer to our historic levels."

"Although that remains uncertain, we do see an evading of many of the challenges we faced in fiscal 2011 and a rising of new opportunities," Faust said

At the beginning of fiscal 2011, the municipal bond market was under "significant pressure" caused by what the company believes is "misguided speculation of an eminent collapse in municipal credit around the country."

"The projected wave of default did not materialize, but the vocal conjecture had a big impact on investors," Faust said.

This led to large-scale municipal bond fund redemptions, portfolio liquidations and bond price declines, according to Faust

"Today the storm seems largely behind us," Faust said. "State and local governments continue to face the long-term financial challenges but have demonstrated an ability to increase revenues, cut spending and defer new financings beyond what the naysayers could envision."

The Boston-based investment management firm believes that municipal bond funds will be a positive contributor to its portfolios in 2012, as they have been one of the top-performing domestic asset classes of 2011.

© 2015 Prospect News.
All content on this website is protected by copyright law in the U.S. and elsewhere. For the use of the person downloading only.
Redistribution and copying are prohibited by law without written permission in advance from Prospect News.
Redistribution or copying includes e-mailing, printing multiple copies or any other form of reproduction.