The world’s 500 largest asset managers’ total discretionary assets under management increased by 10.2 per cent in 2021, reaching US$131.7 trillion, according to a new report by WTW’s Thinking Ahead Institute.

It found North American AUM accounted for more than half (59.9 per cent) of AUM in the top 500 managers, garnering $78.9 trillion by the end of 2021. North America experienced an 11.7 per cent increase, while Europe only grew by 4.1 per cent and Japan decreased by 1.1 per cent. Managers from the rest of the world had a strong year and saw their assets under management grow by 32.4 per cent.

BlackRock Inc. was ranked the world’s largest asset manager and the first to exceed $10 trillion, followed by the Vanguard Group Inc. at $8 trillion and Fidelity Investments and State Street Global Advisors, at roughly $4 trillion each. The world’s top 20 asset managers are now responsible for more than $59 trillion of assets, having grown at an above-average annual rate of 13 per cent, said the report, noting U.S. managers accounted for 15 of the 20 largest firms and around 82 per cent of assets. Notably, as a result of consolidation and competition, 218 asset manager that featured in the ranking 10 years ago are now absent.

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Passively managed funds grew by 12.1 per cent during the year — faster than actively managed assets, which grew by 9.5 per cent — and now account for 29 per cent of assets, a record high, according to the report. Equity and fixed income continued to make up the majority of assets at 46.5 per cent and 33.9 per cent, respectively. Other strategies, including liability-driven investment and other specialist solutions accounted for 7.1 per cent of assets, followed by cash (6.6 per cent) and alternatives (5.9 per cent).

Assets allocated to environmental, social and governance investments increased to more than 60 per cent of assets, while allocations to LDI strategies slowed marginally to 13.9 per cent, down from 14.2 per cent in 2020. As well, more than half (56 per cent) of managers increased the number of women and members of other protected minority groups in high positions. Three-quarters of managers allocated additional resources to technology and big data (76 per cent) and cybersecurity (75 per cent).

In addition, nearly three-quarters (72 per cent) of managers increased the number of investment products they offer to clients. Almost a third (29 per cent) said aggregate investment management fee levels decreased, while 13 per cent reported an increase in fees.

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