Total assets under management (AUM) at the world’s 500 largest asset managers amounted to USD $113.7-trillion at the end of 2022 according to new research from risk consulting firm, WTW and the Thinking Ahead Institute, a not-for-profit research network.
“This represents a 13.7 per cent drop on the previous year, which is the first significant fall in assets managed since the global financial crisis of 2008,” WTW states in an announcement about the release. “Differences exist among regions. While Japanese managers within the world’s largest 500 fared much better than average with a 5.5 per cent decrease in assets, North American asset managers saw a 14.2 per cent decrease and Europe, including the UK, experienced an above average 16.8 per cent decrease.”
The report, The world’s largest 500 asset managers: A Thinking Ahead Institute and Pensions & Investments joint study, in looking at the distribution of assets by country, states that “the last decade has seen an increase in assets mostly from the U.S., Canada, China, South Korea, India, Hong Kong and Liechtenstein. In contrast, many European countries and Japan have lost market share during this period (2012 to 2022).”
The researchers say losses in 2022 effectively erased most gains achieved in 2021.
Passively managed funds gained ground during the year, climbing four per cent to make up 34.7 per cent of total AUM at the end of 2022. The majority – 65.3 per cent – remains invested in actively managed strategies.
Blackrock remains the world’s largest asset manager. Their AUM dropped from just over $10-trillion to just over $8-trillion in 2022 (All figures in USD). In Canada, Brookfield Asset Management jumped the most, from 71 in the list of 500 to the 34th spot between 2017 and 2022. Royal Bank of Canada jumped from 47 to the 36th spot, Sun Life Financial climbed from 31 to 25 and Manulife also inched higher, eking out a two-spot gain from 34 to 32.
Insights gleaned while conducting the research include manager sentiments that interest rates will remain higher for longer, causing concerns about inflation and growth to remain elevated. “The potential for a single event to trigger widespread market disruption remains a constant concern,” they write.
Sustainability remains top of mind, while rightsizing of sustainability efforts receives more attention as organizations balance regulatory compliance and fiduciary integrity. Emerging technologies, including artificial intelligence (AI) are also discussed, saying these have the potential to improve operational efficiency, despite the risk which should also be considered and managed, they say. “The competition for talent in technology roles has skyrocketed,” they add.