US trade policy and geopolitical tensions will hamper growth in the investment management industry, but assets are still expected to hit USD132 trillion by 2027.
Research from consultancy Broadridge finds the industry will expand at a compound annual growth rate (CAGR) of 7.6 per cent increasing from USD106 trillion in 2024, passing USD114 trillion in 2025, to reach USD132 trillion by 2027.
Yet the consultancy has revised earlier, more optimistic forecasts following the impact of the US administration’s trade tariffs, ongoing wars in the Middle East and Ukraine, and persistent inflation.
Asset managers can expect global revenue to climb from USD368 trillion in 2024 to USD443 trillion by 2027; an increase of 7 per cent.
Growth will be anchored in overall asset expansion, reinforced by rising allocations to higher-fee products and stronger growth in higher-margin client segments. Conversely, revenues from legacy product strongholds, particularly public-market active equity strategies, continue to face pressure, contributing to the sustained downward trajectory in fee margins.
Meanwhile investor expectation for lower fees will impede margins.
Nabeel Ansari, Senior Director of Global Growth Solutions at Broadridge, says: “Fee compression remains a global reality: while absolute revenues are set to increase, margins continue to face structural pressure. Drivers include intensifying competition for flows, ongoing distributor consolidation creating pricing power, and the need to remain competitive against lower-fee options such as passives.”
The report reinforces the ongoing shift to passive equity investment driven by an investor preference for cost efficiency and calibrated risk-adjusted returns.
The research reports that active equities will decline at organic growth rate of -0.8 per cent CAGR over the three years from 2024.
However, Ansari notes that investors are turning to active management for their fixed income allocations which will grow at 2.5% CAGR over the three years from 2024.
Ansari says: “Fixed income presents a more favourable outlook for active managers, with demand for alpha generation and tactical flexibility persisting particularly during this era of elevated rates.”
Private markets also represent a substantial new revenue pipeline as government policy and new investment vehicles democratise the market.
However, Ansari says this trend favours managers with the investment platforms and distribution capabilities to scale participation.
The ability to scale is also essential for asset managers wanting to capture the ‘monumental’ growth in retail assets which are on track to represent 50 per cent of the global asset pool by 2027.
Ansari says: “Retail assets are propelled by powerful tailwinds [including] shifting investor demographics, the rise of digital distribution platforms, and managers innovating products tailored to this segment.”
Reflecting the trend to retail, ETFs are positioned for outsized growth, increasingly outpacing traditional vehicles such as mutual funds and segregated accounts.
Ansari says this momentum reflects their structural advantages such as lower cost, competitive risk-adjusted returns, high liquidity, and continuous product innovation.
Passive ETFs are expected to capture the largest share of absolute flows, underpinned by themes like the expansion of ETF savings plans in Europе.
Meanwhile, Ansari notes that active ETFs are set to deliver strong organic growth, with adoption accelerating in markets outside the US as “investors deepen engagement with the opportunity set”.
