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New landscape for asset management industry

The asset management industry has emerged from the crisis with a new landscape, according to Fitch Ratings.

In its Fund and Asset Manager Ratings report last year, the ratings agency outlined the industry’s fear in the midst of the crisis – with risk management a key priority in the downturn.

The 2009 report, released today, shows the extent of the damage fund groups have seen. Over the crisis, assets under management have collapsed by an average of 25% with as much as €400 billion (£341 billion) of capital flowing out of risky asset classes, according to data supplied by Lipper.

The fund of hedge funds space was particularly hard hit, with assets contracting as much as 40% from their peak in the second quarter of 2008. The majority of this (80%) can be accounted for by an exodus of private investors from the asset class.

As a result of the trauma of the past 18 months, the industry has entered a period of consolidation that saw the disappearance of many household names. These include divestitures and mergers such as the purchase of Credit Suisse Asset Management by Aberdeen and BNP Paribas’ acquisition of Fortis Investment Management.

In the small- and mid-cap space, the industry has also seen consolidation with Société Générale Asset Management’s sale to GLG Partners and Henderson’s buy-out of the ailing New Star.

One significant development was the rise of interest in passive investments. Fitch says that among the top 10 groups in terms of net sales in Europe over the past year, four were exchange traded fund providers or a market leader in passive investment. Of the remaining six, three were boutique managers – Carmignac, Bluebay and GLG.

Fitch says coming out of the crisis investors should put emphasis on a top down process that focuses on beta, genuine alpha and flexible allocation products.

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