Assets managed by the world’s 500 largest asset managers fell in 2015 for the first time since 2011, according to research conducted by Willis Towers Watson and U.S. investment newspaper Pensions & Investments.
Total assets under management were down 1.7 per cent at the end of 2015, to US$76.7 trillion compared to US$78.1 trillion the year before. North American firms’ assets under management were US$44 trillion at the end of 2015, a decrease of 1.1 per cent from the previous year.
“The decline in global assets demonstrates the impact of the challenging investment landscape and currency fluctuations on asset managers across the globe,” said Luba Nikulina, global head of manager research at Willis Towers Watson, in a release. “In 2014 our research showed a dramatic slowdown in growth, yet assets managed by the largest 500 managers still grew by just over two per cent.”
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“This year the figures are markedly different. The economic slowdown has impacted investment performance. At the same time, asset owners are rethinking their business models by internalizing asset management capabilities at the larger end of the spectrum and consolidating at the smaller and mid-size end which also has an impact on capital flows to the industry. This trend will continue to put pressure on revenues and require asset managers to further adapt to this challenging and continuously changing environment.”
According to the research, traditional equity and fixed income still make up the majority of all assets but they declined by 7.1 per cent during 2015. The only stand-out category in terms of growth in 2015 is alternative assets, which grew by 25.1 per cent.
“This will be no surprise to Canadian institutional investors who continue to lead the way in allocating to alternative assets in response to a low growth, low return environment,” said Brad Hough, an investment consultant at Willis Towers Watson. “To access alternative asset classes, many institutional investors are looking to improve governance and add capability, either by augmenting internal resources or using outsourced solutions.”
Keep an eye out for Benefits Canada‘s Top 40 money managers report, which will be published in the November issue.
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