NEW YORK--(BUSINESS WIRE)--
Assets managed by the world’s largest 500 fund managers rose by over 8%, to US$68 trillion in 2012, making up any lost ground from the previous year, when assets in the survey fell by 3%. The Pensions & Investments/Towers Watson World 500 research shows that due to the rise, total assets are now almost back to the record levels of 2007 (around US$69 trillion) and almost double the asset levels of 2002.
“The year 2012 was less volatile, and combined with market rises, it is no surprise that most large investment managers gained assets,” said Craig Baker, global head of research at Towers Watson Investment. “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.”
The research, conducted in conjunction with Pensions & Investments, a leading U.S. investment newspaper, reveals that, by number, bank-owned asset managers continue to dominate the top 20, although the number of independent managers in the group remained static. There are 12 U.S.-based investment managers in the top 20 managing over 64% of these assets, while eight managers are Europe-based. Overall, Japanese managers’ assets decreased by around 9% in 2012, while Europe- and U.S.-based managers’ assets increased by over 8% and around 13%, respectively.
“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,” said Zainul Ali, head of manager research, North America, at Towers Watson Investment. “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.”
According to the research, U.S. asset managers have increased their share of assets from 42% to around 50% during the past 10 years, mainly at the expense of Japanese and Swiss asset managers that have lost around 5% and 4% of market share, and now have 7% and 4%, respectively. The research also shows that large Canadian and French managers have both grown share by about 2% each during the same period.
Since 2002, passive assets managed by the largest managers have grown by over 13% annually, compared to 6% annually for the top 500 managers as a whole. In 2012, passive assets, managed by the largest managers, grew by over 12%, reversing the small fall the prior year.
“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,” said Ali.
Some of the main gainers by rank in the top 50 (including those accomplished through mergers or acquisitions) during the past five years include Royal Bank of Canada (+50 [98→48]), Sumitomo Mitsui Trust & Bank (+33 [71→38]), Shinkin Central Bank (+31 [81→50]), New York Life Investments (+30 [79→49]) and Affiliated Managers Group (+25 [66→41]).
The world's largest money managers
Ranked by total assets under management, in U.S. millions, as of Dec. 31, 2012
|4.||State Street Global||U.S.||$2,086,200|
|7.||J.P. Morgan Chase||U.S.||$1,431,165|
|8.||Bank of New York Mellon||U.S.||$1,385,863|
|14.||Amundi Asset Mgmt.||France||$961,245|
|16.||Goldman Sachs Group||U.S.||$854,000|
|19.||Northern Trust Global||U.S.||$758,943|
Source: Pensions & Investments/Towers Watson World 500
Towers Watson Investment
Towers Watson Investment is focused on creating financial value for the world’s leading institutional investors through its expertise in risk assessment, strategic asset allocation, fiduciary management and investment manager selection. Towers Watson’s Investment business has over 750 associates worldwide, assets under advisory of over US$2 trillion and around US$60 billion of assets under management.
About Towers Watson
Towers Watson (NYSE, NASDAQ: TW) is a leading global professional services company that helps organizations improve performance through effective people, risk and financial management. The company offers solutions in the areas of benefits, talent management, rewards, and risk and capital management. Towers Watson has more than 14,000 associates around the world and is located on the web at towerswatson.com.
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