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Manager assets rise to record $62.4 trillion
Published: July 9, 2013
Worldwide money managers’ total assets under management reached a record $62.4 trillion in 2012, surpassing the $57.2 trillion set in 2007 before the 2008-2009 financial crisis, according to a Boston Consulting Group study released Tuesday.
Also, managers’ operating margins rose to an average 37% of net revenues and profit increased to $80 billion, although it remained roughly 15% below pre-crisis highs, according to the annual study, â€œGlobal Asset Management 2013: Capitalizing on the Recovery.â€
The growth in AUM was largely market driven, due to higher global equity and fixed-income returns, with net new asset flows accounting for less of the increase.
Net new flows were a modest 1.2% of global AUM last year. Most flows went to solutions-based managers such as those offering LDI and target-date funds; into strategies other than traditional domestic large-cap equities and domestic fixed income; and into passive strategies. A quarter of traditional managers actually experienced significant outflows from their actively managed core strategies in 2012.
â€œThe glory days of a stand-alone active manager that focuses on outperforming a benchmark are gone,â€ said Gary Shub, BCG partner and a co-author of the report. â€œThey’ll need to move out of core classes and into specialist categories.â€
U.S. managers’ profits were above their European counterparts. While U.S. managers’ 2012 profits rose 10% above pre-crisis levels, European managers’ profits remained 31% below what they were before the crisis.
The study noted that cost discipline among money managers continues to be an issue, particularly with managers experiencing outflows. â€œIn order to afford investment in new capabilities, it is critical to tightly manage the cost structure,â€ according to the report. A thorough review of operations and information technology functions, the report says, will guide managers to â€œefficiency’s next frontier.â€
The study was based on data from more than 120 money managers in BCG’s annual benchmarking study that manage a total of $33 trillion, or 53% of global AUM, as well as information from managers in 42 major global markets provided by third-party sources.
Original Story Link: https://www.pionline.com/article/20130709/dailyreg/130709902