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Luba Nikulina, Willis Towers Watson

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World’s largest fund managers see first decline in assets since 2011

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Assets managed by the world’s largest 500 asset managers fell in 2015 for the first time since 2011, according to the Pensions & Investments/Willis Towers Watson World 500 research.

Total assets under management (AUM) were down 1.7 per cent to USD76.7 trillion at the end of 2015, compared to USD78.1 trillion the year before.
 
According to the research, North American firms’ AUM were USD44.0 trillion at the end of 2015, a decrease of 1.1 per cent from the previous year, while assets managed by European managers, including the UK, decreased by 3.3 per cent, to USD25.1 trillion. UK-based firms’ assets decreased 2 per cent, reducing their AUM to USD6.6 trillion.
 
Luba Nikulina (pictured), global head of manager research at Willis Towers Watson, says: “The decline in global assets demonstrates the impact of the challenging investment landscape and currency fluctuations on asset managers across the globe. In 2014 our research showed a dramatic slowdown in growth, yet assets managed by the largest 500 managers still grew by just over 2 per cent. This year the figures are markedly different. The economic slowdown has impacted investment performance. At the same time, asset owners are rethinking their business models by internalising asset management capabilities at the larger end of the spectrum and consolidating at the smaller and mid-size end which also has an impact on capital flows to the industry. This trend will continue to put pressure on revenues and require asset managers to further adapt to this challenging and continuously changing environment.”
 
The research reveals that actively managed assets, which continue to make up the majority of total assets (78.3 per cent), also fell 2.8 per cent in 2015, while passive assets declined at a faster rate, 5.5 per cent during the year.
 
Although the top 20 managers experienced a 1 per cent decrease in assets from USD32.5 trillion to USD32.1 trillion, their share of total assets increased slightly from 41.6 per cent to 41.9 per cent.
 
The research shows that traditional equity and fixed income still make up the majority of all assets (78.2 per cent: 45.4 per cent equity, 32.8 per cent fixed income), but they declined by 7.1 per cent during 2015. The only stand-out category in terms of growth in 2015 is alternative assets which grew by 25.1 per cent.
 
Nikulina says: “The increase in alternative assets shows that in an environment of low returns and increased uncertainty, investors are under pressure to identify other means of achieving more diversity and higher returns. This shift in strategy is both welcome and essential if the investment industry is to adapt to meet its current and future challenges. However the world of alternatives is much more complex than traditional bonds and equities so investors will need to focus on skill, holistic risk management and best in class implementation.”
 
The research also reveals that in the past 10 years the proportion of asset managers from the US in the top 500 has increased significantly from 41.9 per cent to 52.5 per cent. Within the top 20 in 2015 there were 12 US managers accounting for 69 per cent of assets (up from 11 managers and 65.5 per cent of the assets at the end of 2014). The remaining assets were managed by European firms.
 
Assets of the US top 20 companies in 2015 increased 1.2 per cent to over USD22 trillion in 2015, while assets of European top 20 companies decreased 3.3 per cent to just under USD10 trillion in the same period.
 
Some of the main gainers by rank in the top 50 (including through mergers or acquisitions) during the past five years include Aegon Group (+38 [63→25]), New York Life Investments (+28 [67→39]), Dimensional Fund Advisors (+25 [74→49]), Sumitomo Mitsui Trust Holdings (+22 [55→33]) and Standard Life (+21 [71→50]).

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