WTW’s Thinking Ahead Institute found that the top-ranked asset managers in the world remained unchanged, with BlackRock securing the top spot by assets with $10.01 trillion, followed by Vanguard ($8.46 trillion) and Fidelity Investments ($4.23 trillion) as of the end of 2021, according to the report.
Over the past five years, the fastest-growing asset managers by change in assets under management were Geode Capital Management, which increased assets by 31% over the period to $1.01 trillion, followed by Fidelity International at 23.9% increasing assets to $813 billion, and Brookfield Asset Management at 23.5%, which saw its assets grow to over $688 billion.
Regionally, North America experienced an 11.7% increase in total assets, reaching $78.9 trillion. In Europe (including the U.K.), total assets grew by 4.1% to $36.2 trillion, and in Japan, assets decreased by 1.1% to $6.1 trillion. Managers from the rest of the world (Africa, Asian-Pacific, Latin America) saw their total assets grow by 32.4% over the past year, to $10.5 trillion, far faster than any other part of the world.
The top 20 managers’ share of the total assets increased from 44.0% in 2020 to 45.2% in 2021. Their total assets under management increased by 13.0% to $59.5 trillion. Of the Top 20, 12 are independent asset managers, six are banks, and two are insurer-owned managers.
Traditional asset classes accounted for 80.4% of all assets and those classes (stocks and bonds) experienced an increase of 12.4%. Passive investments represented 29.1% and increased by 12.1%, as compared to a 9.5% growth in actively managed assets.
The average asset allocation in 2021, amongst the top 500 largest asset managers, was 46.5% equity, 33.9% fixed income, 6.6% cash, 5.9% alternatives and 7.1% to other categories, including balanced funds/strategies, multi-asset funds, infrastructure, commodities, private debt, derivatives, currencies, and structured products. It should be noted that not all 500 of the asset managers operate and invest into every asset class.
Dollars invested into environmental, social and governance (ESG) mandates globally totaled $7.6 trillion, according to the report. The report writes on the development of ESG in the financial services sector, “ESG regulation has become more rigorous and more prescriptive with asset managers facing growing pressure to provide more data and have transparent and effective reports. Reporting organizations have been seeking to standardize these requirements to address the growing sense of survey fatigue.”
While there have been many new offerings by firms used to measure ESG, the report found that managers’ most widely used providers of ESG statistics were MSCI, Sustainalytics, ISS, Bloomberg, RepRisk, S&P and CDP.
The report cited a possible slowdown in liability-driven investments as a fall-out of the recent U.K. Gilt crisis. Total dollars invested into LDI schemes totaled $3.665 trillion in 2021, representing a 3.9% increase year-over-year. That 3.9% increase represents a much slower rate of growth in the space than in previous sequential years, which saw total LDI investment increase 10.6% from 2019 to 2020.
The report highlights that the asset management industry is a swiftly moving and ever-changing landscape. Of the 500 largest asset managers 10 years ago, 218 are absent from the top 500 this year. The median assets under management for the top 500 asset managers was $62 billion in 2021, up 5.6% since last year’s report.
In addition to swiftly moving, the asset management industry was highlighted by the report for its adoption of technology and its embrace of the digital transformation. The report cites the introduction of cloud-based solutions as a better way to meet reporting requirements. The report states, “the continued downward pressure on asset manager fees continues to drive digital transformation as a way to improve operational efficiency. Hybrid working continues to gain ground and keeps evolving with the development of technology.”
Also, of importance noted in the report was the agenda of diversity, equity, and inclusion (DEI) for the asset management industry. The report emphasized that there is growing demand for a detailed and transparent reporting of DEI policies and measurements. The growth in demand follows last year’s announcement by the SEC, which provided guidelines and recommendations for diversity and inclusion in the asset management industry.
The Thinking Ahead Institute is a global not-for-profit research and innovation group, founded in 2015, whose focus is to mobilize capital towards a sustainable future. The Institute boasts membership from around 60 asset owners and asset managers, who collectively oversee more than $16 trillion in assets.
Tags: BlackRock, Bloomberg, Brookfield Asset Management, CDP, Fidelity International, Fidelity Investments, Geode Capital Management, ISS, MSCI, S&P, Sustainalytics, Thinking Ahead Institute, Vanguard, Willis Towers Watson, WTW