Almost half of the top 500 global fund manager brands have disappeared in the last decade, the latest Thinking Ahead Institute annual review of the sector has found. A total of 232 names on the 2009 list of 500 largest asset managers were not on the 2019 list.
Pre-dating the COVID-19 crisis, the Thinking Ahead Institute (TAI) analysis found the 2019 calendar year was a bumper one for the funds industry with total assets under management (AUM) increasing almost 15 per cent over the annual period to burst through the US$100 trillion (A$140.1 trillion) mark for the first time.
But, in somewhat of an understatement, the study, released last week (October 19), says: “There seems to be a quickening of the pace of consolidation.” Roger Urwin, TAI co-founder, said: “The investment industry has always been dynamic, but the pace of change is speeding up, manifested notably through consolidation.”
Passive assets under management increased more than 25 per cent year-on-year, almost exactly double the rate of active counterparts: although, overall active AUM still outweighs passive about three-to-one. However, the TAI active/passive split is based on long-term data for only about a third of the total AUM captured in the study.
Urwin said the growth in index solutions reflected “rapidly advancing technology… changing the shape of mandates and producing products that require less governance and are more streamlined.”
“Private markets have also continued a significant growth trend in the last decade, during which investors have sought higher returns involving higher risk,” he said. The annual TAI survey also found about a third of managers saw average fees drop over the year while 7 per cent increased fees.
BlackRock retained its top-of-the-table title in 2019, finishing the year with US$7.4 trillion under management followed by Vanguard (US$6.2 trillion), State Street (US$3.1 trillion) and Fidelity (US$3 trillion). Notably, the big four players have all benefited from the indexing phenomenon of recent years.
Macquarie with about US$412 billion under management is the highest entry (60) from Australia in the TAI top 500 that also features a handful of other firms from the region including AMP Capital (133), Pendal (199) and Magellan (205). Sitting at 409 on the list, the Wellington-headquartered Morrison should be the sole NZ entry, however, TAI classes the almost US$16 billion the manager has as ‘Australian’.
Many of the names on the TAI top 500 would be unfamiliar to Australian and NZ investors such as Geode Capital Management – the biggest mover over the year, rocketing up 38 places to 45 on annual AUM growth of just under 24 per cent.
In the release, Marisa Hall, TAI co-head, said the asset management industry was also adapting “to reflect changes in client expectations as well as those of their colleagues and broader society”. She said: “These [changes] are increasingly linked to purpose and culture, diversity and inclusion and ESG and are taking place at the highest levels of these organisations.” For example, the TAI study found:
- 50 per cent of managers increased the number of ethnic minorities and women at high positions;
- Client interest in sustainable investing, including voting, increased across 88 per cent of managers;
- 84 per cent of managers increased resources deployed to technology and big data and 76 per cent increased resources deployed to cyber security;
- The number of product offerings during the year increased across 65 per cent of surveyed firms; and,
- 51 per cent of managers reported an increase in the level of regulatory oversight.
The report was produced in association with the Pensions & Investments publication. TAI is an independent offshoot of the Willis Towers Watson Thinking Ahead Group. The big consulting firm itself has succumbed to the consolidation trend in a merger with global rival Aon now in train.
- David Chaplin, Investment News NZ