Japanese and Swiss lose as US managers grow assets

Assets managed by the world’s largest 500 fund managers rose by over 8 per cent to £42 trillion in 2012, making up lost ground from the previous year when assets in the survey fell by 3 per cent, according to research from Towers Watson.

The research shows total assets are almost back to the record £43 trillion of 2007 and almost double the level in 2002.

US-based investment managers dominate, representing 12 of the top 20 investment houses, managing over 64 per cent of assets. The other eight managers are based in Europe. Japanese managers’ assets decreased by around 9 per cent in 2012, while European managers’ assets and US-based managers’ assets increased by 8 and 13 per cent respectively.
US asset managers have increased their share of assets in the research from 42 per cent to around 50 per cent during the past 10 years, mainly at the expense of Japanese and Swiss asset managers who have lost around 5 and 4 per cent of market share and now have 7 and 4 per cent respectively.  The research also shows that large Canadian and French managers have both grown share by about 2 per cent each during the same period.
BlackRock had the most assets under management in 2012, followed by Allianz and Vanguard.
Since 2002, passive assets managed by the largest managers have grown by over 13 per cent annually compared to 6 per cent annually for the top 500 managers as a whole. In 2012 passive assets, managed by the largest managers, grew by over 12 per cent, reversing the small fall the prior year.

Towers Watson Investment global head of research Craig Baker says: “2012 was a less volatile year and combined with market rises it is no surprise that most large investment managers gained assets. Looking back over a longer period reminds us how dramatically the asset management industry has grown, virtually doubling in terms of asset size, in the past decade. While this is informative, the real question to ask is how much value it has contributed to investors and end beneficiaries, and broader society, versus how many assets it has just gathered for itself during this time.”
 “While we are all pleased to see asset growth back and in many instances good returns for investors, it is imperative that the pressure on asset managers, and other agents in the investment industry, to produce better aligned fee structures does not dissipate, particularly in the area of performance-related fees. In addition, investors should not stop looking at lower-cost options, particularly if they have limited governance, while ensuring they are not overpaying for market returns.
“Institutional investors are increasingly looking for the most efficient way to invest their assets, which has led to more passive management and low cost, systematic approaches, also known as smart beta.  While smart beta is not a substitute for good active management, it allows investors to target their active exposure in strategies that cannot easily be replicated through a systematic approach and where there is evidence of real skill.  Asset owners are quite rightly becoming far less tolerant of paying active management fees for simply getting market exposure and are looking to obtain the latter as cheaply and efficiently as they can. However, they should be aware of the marketing bandwagon effect that has developed around smart beta in the past few years, with too many products just trying to cash in.”

The world’s largest money managers

The world’s largest money managers
Rank Manager Country Total assets
1.
BlackRock
U.S.
$3,791,588
2.
Allianz Group
Germany
$2,447,820
3.
Vanguard Group
U.S.
$2,215,216
4.
State Street Global
U.S.
$2,086,200
5.
Fidelity Investments
U.S.
$1,888,296
6.
AXA Group
France
$1,474,568
7.
J.P. Morgan Chase
U.S.
$1,431,165
8.
Bank of New York Mellon
U.S.
$1,385,863
9.
BNP Paribas
France
$1,303,989
10.
Deutsche Bank
Germany
$1,247,477
11.
Capital Group
U.S.
$1,147,411
12.
Prudential Financial
U.S.
$1,060,250
13.
UBS
Switzerland
$999,758
14.
Amundi Asset Mgmt.
France
$961,245
15.
HSBC Holdings
U.K.
$910,000
16.
Goldman Sachs Group
U.S.
$854,000
17.
Franklin Templeton
U.S.
$781,769
18.
Natixis
France
$779,317
19.
Northern Trust Global
U.S.
$758,943
20.
Wellington Mgmt.
U.S.
$757,729