This year’s Santa Claus rally has kicked off, with Wednesday seeing the S&P 500 notch a fresh all-time closing high. Sentiment improved after new applications for U.S. unemployment benefits unexpectedly declined, reinforcing the view that the labor market remains resilient. Adding to the upbeat tone, the U.S. economy expanded at an annualized 4.3% pace in the third quarter of 2025, well above expectations of 3.2% and the prior quarter’s 3.8%.

This underscored the resilient economy and consumer demand, which are likely to drive healthy corporate earnings going forward. Further, a stronger economic growth outlook and additional interest rate cut expectations from the Federal Reserve for 2026 bolstered investors’ optimism.

As the health of the economy directly affects the performance of the finance sector stocks, we bring two asset managers, Affiliated Managers Group, Inc. (AMG Quick QuoteAMG - Free Report) and Federated Hermes, Inc. (FHI Quick QuoteFHI - Free Report) , which reached new highs on Wednesday, given the bullish investor sentiments.

Before we see whether these two asset managers have room for more upside, let’s try to understand why one should keep a note of stocks that are touching 52-week highs and the implications on the stock-picking strategy.

Many investors use 52-week highs to time entries or exits. A new high signals strong momentum and sustained gains, often attracting traders looking to ride the uptrend. However, stocks at fresh highs can also face profit-taking, leading to pullbacks or reversals, and investors may worry about overvaluation. Still, a 52-week high doesn’t always mean a stock is expensive. Avoiding them outright can mean missing long-term winners.

2 Asset Management Stocks to Keep an Eye on

Affiliated Managers’ shares hit a new 52-week high of $293.74 during Wednesday’s trading session to finally close at $291.13. The stock has been hitting new highs since the announcement of the third-quarter 2025 results on Nov. 3.

Investor optimism seems to be driven by AMG’s solid quarterly performance and upbeat fourth-quarter 2025 guidance. Management expects economic earnings to be between $8.10 and $9.26 per share. In the fourth quarter of 2024, the metric was $6.53. This expected significant year-over-year improvement reinforces the success of its pivot toward private markets and liquid alternatives strategy.

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This pivot is driving strong inflows that have helped offset weakness in traditional strategies. In 2025, AMG announced four new partnerships, NorthBridge Partners, Verition Fund Management, Qualitas Energy and Montefiore Investment, which are expected to add nearly $24 billion of assets under management (AUM) across these segments. It also partnered with Brown Brothers Harriman to expand BBH’s structured and alternative credit strategies in the U.S. wealth channel, and over the past two years, took minority stakes in Suma Capital, Ara Partners and Forbion.

As of Sept. 30, 2025, alternatives made up almost 44% of AUM and generated roughly 55% of AMG’s earnings. The company is aiming for more than 66% in earnings from alternatives over the next few years to improve durability through market cycles. To support and fund its growth, the company has ample liquidity. Since 2023, divestitures of stakes in Comvest Partners’ private credit business, Peppertree, Veritable LP and Baring Private Equity Asia have significantly bolstered the company’s investment capacity.

After years of net outflows, the shift has started showing results. Affiliated Managers’ net client cash flows have turned positive, with $17 billion of inflows in the first nine months of 2025. Additionally, revenues, which have been pressured in recent years, stabilized as alternatives scaled. The company expects 2025 performance fees to be in the $110-$150 million range. 

However, persistently increasing operating expenses are expected to hurt this Zacks Rank #3 (Hold) company’s bottom-line growth to an extent. Further, the presence of substantial intangible assets on its balance sheet is a woe. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Shares of Federated Hermes touched a new 52-week high of $54.48 on the last trading day, before ending the session at $54.33. Investors turned bullish on the stock, driven by overall positive sentiments that are supporting the broader markets.

Federated Hermes has delivered steady AUM growth over time, with AUM rising at a 7.4% CAGR in the four years through 2024. Further, the company ended the first nine months of 2025 with a record AUM of $871.2 billion, driven by record money market assets and an increase in equity assets. Its diversified asset base and continued momentum in liquidity-focused strategies are expected to support further growth.

FHI remains a leader in money market business, with its money market assets witnessing a steady rise. As of Sept. 30, 2025, money-market AUM was $652.8 billion. Management expects conditions to stay favorable as money market fund yields remain an attractive alternative to direct market instruments and bank deposits.

Additionally, Federated Hermes has broadened its platform capabilities and strengthened operations across key markets through acquisitions. Some notable ones include C.W. Henderson & Associates (strengthened separately managed accounts) and Horizon Advisers’ investment management-related assets. Its inorganic growth efforts will continue to drive the AUM balance in the upcoming period. 

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FHI’s financial flexibility remains solid. As of Sept. 30, 2025, the company held $647.4 million in cash against $348.3 million in long-term debt, providing ample liquidity and manageable leverage. This will continue to support shareholder returns, which are the company’s key focus. The company pays regular dividends and has raised its quarterly payout five times in the last five years, with an annual growth of 2.83%. Further, this Zacks Rank #3 company has a share repurchase program in place. As of Sept. 30, 2025, nearly 6.1 million shares were available under the plan.

However, rising expenses and strict regulations might affect Federated Hermes’ performance. Also, a significant dependence on net investment advisory fees and a rise in fee waivers are worrisome.