Digital wealth managers are fishing in a $80trn market

By Daniel Lanyon on Monday 30 October 2017

Savings and Investment

The assets of world’s largest fund managers is at a record high.

The assets of world’s largest fund managers is at a record high.

Total assets under management (AuM) of the world’s largest 500 managers grew to $81.2trn in 2016, representing a rise of 5.8 per cent on the previous year, according to figures from Willis Towers Watson’s Global 500 research.

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

Passively managed assets continue to gain share of total assets at the expense of active management. Although the majority of total assets (78.4 per cent) are still managed actively, its share has declined from 79.7 per cent from end of last year as passive management continues to grow in popularity.

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

“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 experienced a 6.7 per cent increase in AuM, which now stands at $34.3trn, compared to $26trn ten years ago and $ 20.5trn 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. Despite this, the bottom 250 managers experienced a superior growth rate in assets managed, rising by 7.3 per cent over the year.

One of the largest investors in UK-based robo-advice platform Scalable Capital, BlackRock, retains its position at the top of the manager rankings for the eighth consecutive year.

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