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World’s largest asset managers suffer US$18tn AUM drop

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Australian managers fared better than many of their global counterparts last year.

The world’s 500 largest asset managers had US$113.7 trillion in assets under management (AUM) at the end of 2022, a fall of US$18 trillion or 13.7 per cent compared to the year prior.

According to research published by the Thinking Ahead Institute, this marked the first significant fall in assets for the largest managers in the world since the Global Financial Crisis (GFC).

Australian managers were “relatively resilient” during the year, the Thinking Ahead Institute said, recording an AUM decline of 6.6 per cent, versus declines of 14.2 per cent for North American managers, and 16.8 per cent for European managers.

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Notably, Macquarie Group moved up five positions in the global rankings during the year, while others, including MLC Asset Management, AMP Capital, Challenger, Perpetual, Pinnacle Investment Management, and Magellan Financial Group lost places.

“Even though Australian equities performed better than many other developed markets in 2022, local managers with more exposure to equity business saw their rankings decline,” said Leslie Mao, head of equity research, co-portfolio manager at WTW in Australia.

“By comparison, managers with exposure to alternative asset classes such as infrastructure and real estate stacked up reasonably well. Macquarie Group recorded a seven-place gain in rank to be in the world’s top 50 this year, up from 55 the year before.”

Macquarie ranked in 48th place with US$542.79 billion in AUM. IFM Investors was the next Australian firm, moving from 157th position to 140th with US$143.17 billion.

Pendal, which was officially acquired by Perpetual at the start of 2023, was 172nd with US$104.50 billion, followed by MLC in 177th (US$98.46 billion), AMP in 198th (US$84.34 billion), Challenger in 224th (US$67.50 billion), and QIC in 225th (US$67.02 billion).

Other Australian firms in the global rankings included Charter Hall in 240th (US$59.76 billion), Perpetual in 244th (US$58.54 billion), Pinnacle in 246th (US$57.76 billion), Goodman Group in 260th (US$53.99 billion), and Magellan in 277th (US$45.32 billion).

“Another factor that saw a drop in AUM among Australian managers is the ongoing consolidation and internalisation happening within superannuation funds. Some managers, regardless of how they performed, lost assets during this period,” Mr Mao added.

Overall, BlackRock still ranked as the world’s largest asset manager, albeit with a fall in AUM from US$10.01 trillion in 2021 to US$8.59 trillion in 2022. This was followed by Vanguard with US$7.25 trillion, down from US$8.47 trillion.

The research highlighted a significant gap to the next largest asset managers, Fidelity and State Street, which had US$3.66 trillion and $3.48 trillion, respectively.

Rounding out the top 10 were JPMorgan Chase (US$2.77 trillion), Goldman Sachs (US$2.55 trillion), Allianz Group (US$2.29 trillion), Capital Group (US$2.18 trillion), Amundi (US$2.03 trillion), and UBS (US$1.85 trillion).

The top 20 managers held a 44.2 per cent share in total AUM, down from 45.2 per cent a year earlier, impacted by falling equity and bond markets. Combined, the AUM of these 20 managers decreased by 15.5 per cent to US$50.3 trillion.

“Throughout 2022, amidst significant turbulence, high inflation and interest rates, and geopolitical tension, investors have faced losses that effectively erased most of the gains achieved during the record-breaking 2021,” said Jessica Gao, director at the Thinking Ahead Institute.

“As we have conducted this research, a common theme throughout our conversations with managers has been to expect a higher-for-longer regime in interest rates in which concerns about inflation and growth remain elevated, suggesting investment managers are not out of the woods yet.”

The research also found that investment in passively managed funds accounted for 34.7 per cent of the total AUM, an increase of 4 percentage points.

The Thinking Ahead Institute noted that Australian managers with meaningful active equity exposure suffered from the move from active to passive, as some super funds continued de-risking their portfolios in response to the Your Future Your Super regime.

World’s largest asset managers suffer US$18tn AUM drop

Australian managers fared better than many of their global counterparts last year.

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Jon Bragg

Jon Bragg

Jon Bragg is a journalist for Momentum Media's Investor Daily, nestegg and ifa. He enjoys writing about a wide variety of financial topics and issues and exploring the many implications they have on all aspects of life.

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