Global asset managers exceed USD100 trillion as large managers grow market share
Assets under management at the largest global asset managers have piled up to a record USD104.4 trillion, rising almost 15 per cent from the previous year, according to new research from the Thinking Ahead Institute.
The money managed by the largest 500 asset managers has risen almost three-fold since 2000, when assets totalled USD35.2 trillion.
The market has been consolidating, with the 20 largest asset managers now accounting for 43 per cent of total assets. This has risen from 38 per cent in 2000, and 29 per cent in 1995.
The four largest players in the market by amount of assets are US fund managers BlackRock, Vanguard, State Street, and Fidelity, with German insurance fund Allianz coming in fifth.
In the last decade, 232 asset manager names have dropped out of the ranking.
Meanwhile, there has been news in October of further consolidation to come, with 19th largest fund management firm Morgan Stanley planning to acquire Eaton Vance.
Plans have also been floated by activist investor Nelson Peltz to merge Janus Henderson and Invesco, which is ranked 16th largest in the world by The Thinking Ahead Institute.
“The investment industry has always been dynamic, but the pace of change is speeding up, manifested notably through consolidation,” says Roger Urwin, co-founder of the Thinking Ahead Institute.
“In addition, rapidly advancing technology is changing the shape of mandates and producing products that require less governance and are more streamlined. This has led to the growth of passive and index tracking, factor-based strategies and solutions. Private markets have also continued a significant growth trend in the last decade, during which investors have sought higher returns involving higher risk.”
According to the research, passively managed assets in the survey grew to USD7.9 trillion in 2019, up from USD4.9 trillion in 2015.
Urwin adds: “Most asset management processes – including investment, operating and decision-making – are also having to evolve. This is being driven by, in particular, asset owners seeking the benefits of outsourcing; the increased use of the Total Portfolio Approach, especially when targeting absolute return; and the use of index tracking in ETFs, where there is an active choice of the index.”
The research also shows that aggregate investment management fee levels decreased for 34 per cent of managers over the last year, and only increased for 7 per cent. At the same time, over half of managers reported an increase in the level of regulatory oversight.
Asset managers have been focusing more on improving diversity among their employees, with 50 per cent of managers increasing the number of ethnic minorities and women at high positions.
Client interest in sustainable investing, including voting, has also increased across 88 per cent of managers.
“The topics of conversation at asset managers are also changing, to reflect changes in client expectations as well as those of their colleagues and broader society. These are increasingly linked to purpose and culture, diversity and inclusion and ESG and are taking place at the highest levels of these organisations,” says Marisa Hall, co-head of the Thinking Ahead Institute.