The total assets under management of the world’s largest 500 managers increased by 5.8 per cent to $81.2trn in 2016, although UK firms saw AUM drop for the second consecutive year, falling by 4.5 per cent to $6.3trn.
The Willis Towers Global 500 research shows that AUM by North American managers rose 7.7 per cent over the year to $47.4trn while assets managed by European managers, including the UK, increased by 2.8 per cent to $25.8trn. On a global basis, actively managed assets declined from 79.7 per cent to 78.4 per cent in 2016.
Willis Towers Watson global head of manager research Luba Nikulina says: “While 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 saw AUM continue to rise for the third consecutive year, up 6.7 per cent over the year to $34.3trn, compared to $26trn a decade ago. However, the AUM of the bottom 250 managers saw a higher growth rate of 7.3 per cent over the year.
As expected, equity and fixed income represented the bulk of the assets, accounting for 44.3 per cent and 34.4 per cent respectively, although alternatives continued to see strong growth, up 5.1 per cent in 2016.
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.”
Nikulina adds: “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.”
Asset management giant BlackRock retained pole position for the eighth consecutive year, although Schroder Investment Management is among the main gainers in the top 50 over the past five years.