Industry increasingly concentrated in hands of large US asset managers, BCG says
The global asset management industry has risen to a record high as measured by assets under management (AUM) last year, surpassing even pre-crisis levels, led by gains among US managers and rising asset prices, according to a study by global management consulting firm the Boston Consulting Group (BCG).
AUM worldwide rose to $62.4 tn in 2012, a 9 percent increase on the previous year and well above the all-time record set in 2007 of $57.2 tn, says BCG in a press release. The growth comes after four consecutive years of stagnation in the industry.
The study of more than 120 leading managers with a combined $33 tn in AUM, or 53 percent of the global total, shows the AUM of US-based asset managers exceeded the pre-crisis levels by an average of 10 percent. Assets managed by European firms, on the other hand, were still 31 percent below their 2007 levels.
The industry grew more concentrated in the hands of the largest US asset managers, with the top 10 US managers taking 65 percent of all net new asset inflows in the country, up from 54 percent in the previous year, the report shows. The top 10 managers in Europe took 37 percent in 2012, compared with 44 percent in 2011.
‘US managers have shown the most leadership and reaped the rewards, outperforming their European counterparts,’ the study’s authors write. ‘US players have used their specialty capabilities, product expertise and international distribution to expand in Europe, where they continue to increase market share.’
Most of the increase in AUM last year came from increased asset prices, led by managers in the global fixed income and equity markets, the report notes. Net new assets increased by 1.2 percent. While the increase was much greater than the 0.1 percent gain in 2011, it was well below the average annual growth of between 3 percent and 6 percent registered before the global financial crisis.
‘Most of those new flows moved to solutions, specialties and passive asset classes rather than to the actively managed core assets of traditional players,’ the report points out. ‘A full quarter of traditional managers actually experienced significant erosion of their traditional actively managed core-asset base in 2012, despite the broad recovery of AUM.’
Profit in the industry increased by 7 percent in 2012 from 2011 to a total of $80 bn, the report shows. But this was still 15 percent below pre-crisis levels as asset managers focused on passive and fixed income products with lower margins.
The study also shows that AUM in emerging markets posted a 16 percent increase, and now account for 8 percent of AUM worldwide, compared with 6 percent in 2007. Since the crisis, emerging markets AUM has had a compound annual growth rate of 9 percent while much of the rest of the market stagnated. AUM in China jumped 23 percent last year.
