Further consolidation expected as five largest asset managers exceed size of US economy

Global growth trend

The world’s five largest asset management companies, BlackRock, Vanguard, UBS, State Street, and Fidelity International, hold USD22.5 trillion in assets combined, which is higher than the GDP of the United States.

According to data presented by StockApps, more than a third of that value is held by New York-based money management firm BlackRock, with USD7.3 trillion in assets under management.

The firm’s assets have surged by 57 per cent since 2015, led by growth in passive investment products through BlackRock’s subsidiary iShares, which is the largest Exchange Traded Fund (ETF) provider in the world.

Fellow US money manager Vanguard tipped the balance at USD5.7 trillion in assets under management, ranking as the second-largest asset management group and the largest provider of mutual funds in the world.

Swiss banking company UBS Group came in as the third-largest asset manager globally, with more than USD3.5 trillion in assets under management. The firm also announced a net profit of USD1.23 billion for the second quarter of 2020, 11 per cent lower than last year as credit losses continued to hit amid the coronavirus crisis.

The asset management industry has seen more consolidation in recent years, with Invesco among the latest to join the “trillion-dollar club” of asset managers after acquiring OppenheimerFunds for over USD5 billion in 2019.

Invesco’s chief executive predicted at the time that a third of the asset management industry could disappear by 2024 due to increasing consolidation, as 2019 saw a record year for M&A deals in the asset management industry.

Since then, experts at Cerulli Associates have forecast that asset management industry consolidation may accelerate in the wake of the Covid-19 pandemic as cost pressures continue to rise.

StockApps noted that eight of the ten largest asset management firms are US companies, with American firms State Street Global Advisors and Fidelity Investments ranked as the fourth and fifth largest asset managers globally, with USD3.05 trillion and USD2.92 trillion in total assets under management.