Global Asset Management: 4 Years after the Collapse and Still Facing an Uncertain Future
By Hal M. Bundrick
NEW YORK (
)--The global asset-management industry is slowly crawling out of the rubble from the global financial collapse, but after four years of agonizing recovery, one trend is clear: traditional money managers have a questionable future, according to a new report from The Boston Consulting Group.
Global assets under management (AUM) have nearly regained the levels attained prior to the financial crisis, rising to $62.4 trillion in 2012, surpassing the 2007 record of $57.2 trillion. Operating margins rose to 37% of net revenues and profits increased to $80 billion, although it remained roughly 15% below pre-crisis highs, the report says.On the face, that news is good, but BCG's study found that most of the growth was driven by the rise in global equity and fixed-income markets, rather than by net new asset flows, which increased just 1.2% in 2012. The research found most of the new flows actually moved to "solutions, specialties, and passive asset classes" rather than to the actively-managed core assets of traditional money managers. A full quarter of traditional managers actually experienced significant erosion of their actively managed core-asset base in 2012.
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"That ongoing structural shift has heightened questions about the future of traditional managers," said Gary Shub, a coauthor of the report and a BCG partner based in Boston. "Many asset managers enjoy substantial revenue streams from their existing assets, which often mask the urgency to confront structural changes already here as well as changes to come."
The most successful managers, the report says, are either specialists or traditional providers who have become "ambidextrous." That is, they have maintained their active core-asset businesses while developing capabilities to capture new faster-growth assets, including solutions and specialties. While traditional players saw their profits decrease by 2% a year since 2010, specialists and "ambidextrous" players saw their profits increase by 10% a year.
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The study drew from more than 120 leading industry players managing a total of $33 trillion, or 53% of global assets under management.
--Written by Hal M. Bundrick
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