Total assets under management of the world’s largest 500 managers grew to USD81.2 trillion in 2016, representing a rise of 5.8 per cent on the previous year, according to latest figures from Willis Towers Watson’s Global 500 research.
The research, which takes into account data up to the end of 2016, found that AuM for North American managers increased by 7.7 per cent over the period and now stand at USD 47.4 trillion, while assets managed by European managers, including the UK, increased by 2.8 per cent to USD25.8 trillion. However, UK-based firms saw AuM decline for the second consecutive year, falling by 4.5 per cent in 2016 to USD6.3 trillion.
Although the majority of total assets1 (78.4 per cent) are still managed actively, its share has declined from 79.7 per cent from end of last year as passive management continues to make inroads.
Luba Nikulina, global head of manager research at Willis Towers Watson, says: “It is encouraging to see a return to growth in total global assets, suggesting that managers are finding success in attracting investors towards innovative solutions to achieve superior risk-adjusted returns. Whilst passive assets remain significantly smaller than actively managed assets, the proportion of passively managed assets has grown from 16.5 per cent to 21.6 per cent over the last five years alone. We expect that this trend will continue to put downward pressure on traditional fee structures, particularly amongst active managers seeking to remain competitive and to maximise value to investors.”
The 20 largest asset managers experienced a 6.7 per cent increase in AuM, which now stands at USD 34.3 trillion, compared to USD 26.0 trillion 10 years ago and USD 20.5 trillion in 2008. The share of total assets managed by this group of 20 largest managers increased for the third year in a row, rising from 41.9 per cent in 2015 to 42.3 per cent by the end of 2016. Despite this, the bottom 250 managers experienced a superior growth rate in assets managed, rising by 7.3 per cent over the year.
As with previous years, equity and fixed income assets have continued to dominate, with a 78.7 per cent share of total assets1 (44.3 per cent equity, 34.4 per cent fixed income), experiencing an increase of 3 per cent combined during 2016. Continuing from the strong growth they experienced in 2015, assets1 in alternatives saw a 5.1 per cent increase by the end of 2016, closely followed by equities at 4.1 per cent.
Luba Nikulina says: “Alternatives continue to grow in popularity, with investors remaining under pressure to find effective means of diversification in an environment of lower expected returns from traditional asset classes. These strategies often come with greater complexity and require superior risk management. We see this as linked to the growth in assets managed by managers in the bottom half of our list, suggesting that investors favour smaller investment houses with specialist investment skills.”
“Our research has also highlighted awareness in sustainable investing, with 78 per cent of the firms surveyed acknowledging a growing interest from their clients for these sorts of strategies as they continue to look for ways to add value for clients,” says Luba Nikulina.
While BlackRock retains its position at the top of the manager rankings for the eighth consecutive year, further insight shows the main gainers, by rank, in the top 50 during the past five years include, Dimensional Fund Advisors (+31 [76→45]), Affiliated Managers Group (+20 [52→32]), Nuveen (+16 [36→20]), New York Life Investments (+15 [55→40]) and Schroder Investment Management, (+15 [59→44]).
