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Top 20 managers ruling 43% of giants’ assets

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The top 20 global asset managers have gained a market share of almost half (43 per cent) of the total assets overlooked by the 500 largest managers, according to new research.

The finding has come from Willis Towers Watson’s Thinking Ahead Institute, which did the research in conjunction with US investment newspaper Pensions & Investments

Assets overlooked by the world’s 500 largest asset managers surpassed US$100 trillion ($141.1 trillion) for the first time in 2019, to US104.4 trillion – almost tripling from 2000.

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The Thinking Ahead Institute has also confirmed the top 20 managers saw their market share increase in 2019 to 43 per cent of total assets, steadily rising from 38 per cent in 2000 and 29 per cent in 1995. 

BlackRock has continued to top the list, with US$7.4 trillion in total assets. The following three spots were also taken by US groups: Vanguard Group (US$6.1 trillion), State Street Global (US$3.1 trillion) and Fidelity (US$3 trillion).

The fifth top money manager was German-headquartered Allianz Group, with US$3 billion.

The Australian manager with the most assets was Macquarie, which came in at 60th on the global list with US$412.1 billion. 

IFM Investors followed at 119th with US$163.2 billion and Colonial First State was the third-highest in Australia, at 120th place and with US$159.8 billion. AMP Capital sat at 133rd, with US$142 billion.

Meanwhile, in the last decade, 232 asset manager names dropped out of the top 500 rankings. 

Roger Urwin, co-founder of the Thinking Ahead Institute said the pace of change is speeding up in an already dynamic investment industry, mostly because of consolidation.

“In addition, rapidly advancing technology is changing the shape of the mandates and producing products that require less governance and are more streamlined,” Mr Urwin said. 

“This has led to the growth of passive and index tracking, factor-based strategies and solutions. Private markets have also continued a significant growth trend in the last decade, during which investors have sought higher returns involving higher risk.”

According to the research, passively managed assets in the survey grew to US$7.9 trillion in 2019, up by around 61 per cent from US$4.9 trillion in 2015. 

A majority (84 per cent) of the managers based outside of the US had increased resources deployed to technology and big data and 76 per cent increased resources for cyber security. 

“Most asset management processes – including investment, operating and decision-making – are also having to evolve,” Mr Urwin said. 

“This is being driven by, in particular, asset owners seeking the benefits of outsourcing, the increased use of the Total Portfolio Approach, especially when targeting absolute return; and the use of index tracking in ETFs, where there is an active choice of the index.”

Client interest in sustainable investing, including voting, had surged by 88 per cent across managers that weren’t based in the US. Meanwhile, half of the groups reported they had increased the number of ethnic minorities and women at high positions. 

Simon James, senior investment consultant at Willis Towers Watson in Australia reported there are similar themes playing out in the local asset management scene. 

“More conversations about purpose and culture, diversity and inclusion and ESG are taking place at the highest levels of these organisations – a reflection of changes in client expectations as well as those of their colleagues and broader society,” he said.

The number of product offerings during the year had increased across 65 per cent of the non-US surveyed firms. But aggregate investment management fee levels had decreased for 34 per cent of the managers, while 7 per cent saw an uptick.

 

Top 20 managers ruling 43% of giants’ assets
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Sarah Simpkins

Sarah Simpkins

Sarah Simpkins is a journalist at Momentum Media, reporting primarily on banking, financial services and wealth. 

Prior to joining the team in 2018, Sarah worked in trade media and produced stories for a current affairs program on community radio. 

You can contact her on [email protected].

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