The value of the total assets under management for the world’s 500 largest asset managers reached US$113.7 trillion as of Dec. 31, 2022, down 13.7 per cent from the previous year, according to a new report by WTW’s Thinking Ahead Institute.

In a press release, Jessica Gao, director of the Thinking Ahead Institute, said asset managers struggled mightily in 2022. “Throughout 2022, amid significant turbulence, high inflation and interest rates and geopolitical tension, investors faced losses that effectively erased most of the gains achieved during the record-breaking 2021.”

The assets owned by the top 20 asset managers represented a 44.2 per cent share — or US$50.3 trillion — of the total assets under management reviewed by the report at the end of 2022. The share ownership of the total assets declined slightly, from 45.2 per cent in 2021, which was attributed to the drop in equity and bonds markets.

Read: World’s 100 largest asset managers’ AUM up 9% in 2021: report

The decline in equity and bond markets prompted the world’s largest asset managers to increase assets in alternative investments to a 7.1 per cent share of the assets managed. The share of fixed income allocations dropped 2.4 per cent in 2022.

Japanese managers fared the best in 2022 with only a 5.5 per cent decline, according to the report. U.S.-based asset managers saw a 14.2 per cent decline while the value of assets held by European and U.K. managers dropped by 16.8 per cent. Among the 20 largest asset managers, 14 are based in the U.S. while the remaining six are European.

“As we have conducted this research, a common theme throughout our conversations with managers has been to expect a higher-for-longer regime in interest rates in which concerns about inflation and growth remain elevated, suggesting investment managers are not out of the woods yet,” said Gao in the release.