Asset management is new head of the wolf pack
10 February 2014 London
Image: Shutterstock
Global assets under management will rise to around $101.7 trillion by 2020, from a 2012 total of $63.9 trillion, representing the move of the asset management industry to front and centre
Research from PwC in its report, Asset Management 2020: A brave new world, also found that AUM in South America, Asia, Africa and Middle East economies are set to grow faster than in the developed world in the years leading up to 2020, creating new pools of assets that can potentially be tapped by the asset management industry. However, the majority of assets will still be concentrated in the US and Europe.
PwC predicts that AUM in Europe will rise to $27.9 trillion by 2020, from a 2012 total of $19.7 trillion. This represents a CAGR of 4.4 percent.
Global AUM growth will be driven by pension funds, high-net-worth individuals and sovereign wealth funds. At the client level, the global growth in assets will be driven by three key trends: the increase of mass affluent and high-net-worth-individuals in the South America, Asia, Africa and Middle East region, the expansion and emergence of new sovereign wealth funds with diverse agendas and investment goals, and increasing defined contribution schemes, partly driven by government-incentivised or government-mandated shift to individual retirement plans.
PwC also predicted the transformation of fee models. By 2020, it said, virtually all major territories with distribution networks will have introduced regulation to better align interests for the end-customer, and most will be through some form of prohibition on having the asset manager allocate to distributors as evidenced in the UK’s Retail Distribution Review (RDR) and MiFID II.
This will increase the pressures of transparency on asset managers and will have a substantial impact on the cost structure of the industry.
The report also stated that traditional active management will continue to be the core of the industry as the rising tide of assets lifts all strategies and styles of management.
But traditional active management will grow at a less rapid pace than passive and alternative strategies, and the overall proportion of actively managed traditional assets under management will shrink.
PwC estimates that alternative assets will grow by some 9.3 percent a year between now and 2020, to reach $13 trillion.
Research from PwC in its report, Asset Management 2020: A brave new world, also found that AUM in South America, Asia, Africa and Middle East economies are set to grow faster than in the developed world in the years leading up to 2020, creating new pools of assets that can potentially be tapped by the asset management industry. However, the majority of assets will still be concentrated in the US and Europe.
PwC predicts that AUM in Europe will rise to $27.9 trillion by 2020, from a 2012 total of $19.7 trillion. This represents a CAGR of 4.4 percent.
Global AUM growth will be driven by pension funds, high-net-worth individuals and sovereign wealth funds. At the client level, the global growth in assets will be driven by three key trends: the increase of mass affluent and high-net-worth-individuals in the South America, Asia, Africa and Middle East region, the expansion and emergence of new sovereign wealth funds with diverse agendas and investment goals, and increasing defined contribution schemes, partly driven by government-incentivised or government-mandated shift to individual retirement plans.
PwC also predicted the transformation of fee models. By 2020, it said, virtually all major territories with distribution networks will have introduced regulation to better align interests for the end-customer, and most will be through some form of prohibition on having the asset manager allocate to distributors as evidenced in the UK’s Retail Distribution Review (RDR) and MiFID II.
This will increase the pressures of transparency on asset managers and will have a substantial impact on the cost structure of the industry.
The report also stated that traditional active management will continue to be the core of the industry as the rising tide of assets lifts all strategies and styles of management.
But traditional active management will grow at a less rapid pace than passive and alternative strategies, and the overall proportion of actively managed traditional assets under management will shrink.
PwC estimates that alternative assets will grow by some 9.3 percent a year between now and 2020, to reach $13 trillion.
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