US Asset Management Titans Still Dominate Global Industry; Passive Funds Advance - Study

Tom Burroughes

30 October 2017

US-based asset management firms, with BlackRock standing top of the hill, make up for eight out of the world’s 10-largest businesses of this type, while the largest firms account for more of the total pie than before, data from Willis Towers Watson finds, showing a global total of $81.2 trillion for 2016.

The global total represented a 5.8 per cent increase from the level recorded in 2015, figures from the firm’s Global 500 research showed.

Assets under management for North American managers increased by 7.7 per cent over the period and now stand at $47.4 trillion, whilst assets managed by European managers, including the UK, increased by 2.8 per cent to $25.8 trillion. However, UK-based firms saw AuM decline for the second consecutive year, falling by 4.5 per cent in 2016 to $6.3 trillion.

The statistics also revealed a pattern unveiled by other research, such as from Boston Consulting Group, showing that passively-managed funds are eating into the ground of actively-managed investments.

The attractions of passive funds’ lower fees and a period of stock market gains have helped propel this trend. Although the majority of total assets 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, the report said.

“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,” Luba Nikulina, global head of manager research at Willis Towers Watson, said.

The top-ten managers, in descending order, are: BlackRock ; Vanguard Group ; State Street Global ; Fidelity Investments ; Allianz Group ; JP Morgan Chase ; Bank of New York Mellon $1.647 trillion); AXA Group ; Capital Group , Goldman Sachs Group .
The 20 largest asset managers experienced a 6.7 per cent year-on-year increase in AuM, which now stands at $34.3 trillion, compared to $26.0 trillion ten years ago and $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.

Even so, 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 assets , experiencing an increase of 3 per cent combined during 2016. Continuing from the strong growth they experienced in 2015, assets in alternatives saw a 5.1 per cent increase by the end of 2016, closely followed by equities at 4.1 per cent.
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 ), Affiliated Managers Group ), Nuveen ), New York Life Investments ) and Schroder Investment Management, ).