Assets under management (AuM) at the world’s 500 largest asset managers exceeded US$100 trillion for the first time in 2019 – totalling US$104.4 trillion – according to new research from the Thinking Ahead Institute. This represents an increase of 14.8% on the previous year when total AuM was US$91.5 trillion and an almost three-fold increase from US$35.2 trillion in 2000.

The research, conducted in conjunction with Pensions & Investments, a leading U.S. investment newspaper, confirms growing concentration among the top 20 managers whose market share increased during the period to 43% of total assets, up from 38% in 2000 and 29% in 1995. It also shows that, in the last decade, 232 asset manager names have dropped out of the ranking.

Roger Urwin, co-founder of the Thinking Ahead Institute, said: “The investment industry has always been dynamic, but the pace of change is speeding up, manifested notably through consolidation. 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, factors and solutions products. 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 US$7.9 trillion in 2019, up from US$4.9 trillion in 2015.

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Roger Urwin said: “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 streamlining 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.”

Additional research findings*:

• 50% of managers increased the number of ethnic minorities and women at high positions
• Client interest in sustainable investing, including voting, increased across 88% of managers
• 84% of managers increased resources deployed to technology and big data and 76% increased resources deployed to cyber security
• The number of product offerings during the year increased across 65% of surveyed firms.
• Aggregate investment management fee levels decreased for 34% of managers and increased for 7% of the managers
• 51% of managers reported an increase in the level of regulatory oversight.

Marisa Hall, co-head of the Thinking Ahead Institute, said: “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.”

Source: Thinking Ahead Institute