Assets under management (AuM) at the world’s 500 largest asset managers have reached a new record of 119.5 trillion dollars, according to a new research from the Thinking Ahead Institute. This represents an increase of 14.5% on the previous year when total AuM was 104.4 trillion dollars.
The study, conducted in conjunction with Pensions & Investments, a leading U.S. investment newspaper, confirms growing concentration among the top 20 managers whose market share increased during the period to 44% of total assets. Of the top 500 managers, 221 names which featured on the list a decade ago in 2011 are now absent in 2021, demonstrating a quickening pace of competition, consolidation and rebranding.
The chart shows that Blackrock has retained its position as the largest asset manager in the ranking, followed by Vanguard holding its second place position for the seventh consecutive year. Of the top 20, 14 are U.S. managers, accounting for 78.6% of the top 20 AUM.
On the whole, passive investments represent 26%, an increase of 16.2% compared to a 15.4% growth in actively managed AUM. According to the research, passively-managed assets under management among the largest firms grew to a total of 8.3 trillion dollars in 2020, up from 4.8 trillion in 2016.
It also shows that asset managers have been addressing the growing demand from more sophisticated asset owners, for more complex and tailored investment solutions. Outsourced CIO, Total Portfolio Approach (TPA) and ETFs have all been popular sources of growth for the world’s top managers, to meet clients’ increasing requirements for returns.
“We have witnessed unprecedented change within the investment industry – accelerated dramatically by the pandemic. In particular, sustainability is no longer just a luxury for some firms. Instead, during the pandemic, asset managers from all corners of the world have became even more aware of the interconnectedness of the financial system with society and the environment”, commented Roger Urwin, co-founder of the Thinking Ahead Institute.
In his opinion, asset managers have always had the ambition to develop and innovate: “We have seen this particularly with ESG mandates, which increased by 40% in 2020. The biggest contributor to this was the growth in ESG ETFs”.
Among other trends, the research also found that half of managers increased the proportion of minorities and women in top positions, over the course of the last year and that client interest in sustainable investing increased across 91% of the firms surveyed. Besides, 78% of managers increased resources deployed to technology and big data and 66% increased resources deployed to cyber security.
The number of product offerings increased for 70% of surveyed firms, and aggregate investment management fee levels decreased for 25% but fee levels increased for 21%. Lastly, a majority of managers (59%) experienced an increase in the level of regulatory oversight.