World’s Largest Fund Managers’ Assets Top $80 Trillion

Total AUM for the 500 biggest managers rose 5.8% in 2016.

The total value of assets managed by the world’s largest 500 managers rose 5.8% to $81.2 trillion in 2016, according to a new report from Willis Towers Watson. 

Assets under management (AUM) for North American managers increased 7.7% in 2016 to $47.4 trillion, while assets managed by European managers grew 2.8% to $25.8 trillion. Despite the rise in European AUM, UK-based managers’ assets fell for the second consecutive year, declining 4.5% in 2016 to $6.3 trillion.

According to the report, 78.4% of total assets in the survey are actively managed, however, that is down from 79.7% from the previous year as passive management’s share continues to rise. 

“Whilst passive assets remain significantly smaller than actively managed assets, the proportion of passively managed assets has grown from 16.5% to 21.6% over the last five years alone,” said Luba Nikulina, global head of manager research at Willis Towers Watson, in a statement. “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 maximize value to investors.”

The report also found that the 20 largest asset managers’ AUM increased 6.7% in 2016 to $34.3 trillion, which is also up more than 67% from 2008 when they oversaw $20.5 trillion in assets. The 20 largest managers’ share of total assets increased for the third consecutive year, rising to 42.3% by the end of 2016 from 41.9% in 2015. However, the bottom 250 managers experienced a greater growth rate in assets managed, increasing 7.3% over the year.

Equity assets made up 44.3% of the total assets, while fixed income assets comprised 34.4% for a total of 78.7%, which is an increase of 3% from 2015. Alternative assets saw a 5.1% increase by the end of 2016, while equities share rose 4.1% from the previous year.

“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,” said Nikulina. “We see this as linked to the growth in assets managed by managers in the bottom half of our list, suggesting that investors favor smaller investment houses with specialist investment skills.”

The report said BlackRock retained its position at the top of the manager rankings for the eighth year in a row. It also said 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.

“It is encouraging to see a return to growth in total global assets,” said Nikulina, “suggesting that managers are finding success in attracting investors towards innovative solutions to achieve superior risk-adjusted returns.”

Tags: , , ,

«