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ESG bucks the trend of declining growth among world’s largest asset managers

Amid an accelerating pace of change within the investment industry, there’s a growing appreciation of the importance fund managers place on sustainability and organizational culture

ARLINGTON, Va., Oct. 28, 2019 (GLOBE NEWSWIRE) -- Assets managed in environmental, social and governance (ESG) mandates by the 500 largest asset managers in the world rose by 23.3% in 2018, in contrast to their overall assets under management (AuM), which were down 3% from the previous year, according to the latest Global 500 research from the Thinking Ahead Institute. Assets managed according to ESG principles also increased over the year, by 17.8%.

The research was conducted in conjunction with Pensions & Investments, a leading international investment newspaper.

Sustainability and the importance of culture in the effective practice of investment organizations were key areas of interest in 2018. The report notes that connecting the dots from culture to strategy, to beliefs and values, and to vision and mission has become a critical leadership challenge and opportunity. A stronger underlying purpose, beyond the pursuit of only growth and profit, is identified as a differentiating factor in an overcrowded industry facing a challenging environment. Client interest in sustainable investing, including voting, increased across 83% of the firms surveyed.

“Sustainability has now become an unavoidable issue, and talk on sustainability is becoming action,” said Bob Collie, head of Research at the Thinking Ahead Institute. “There is obviously a saying-doing gap in a lot of places, but perhaps more important right now is the doing-impact gap: Our ability to create a more sustainable economy lags behind the desire. The most meaningful efforts on this front are the ones focused on closing that gap.”

Collie adds, “There is also a growing appreciation of the importance of culture. Good culture does not appear by accident, and our ability to assess and adapt it is developing. There’s room for improvement here.”

The research also found that some 242 names in the 2008 list of global 500 asset managers are not found in the 2018 list. While the past decade has been a fairly benign environment for asset managers with rising markets and strong margins, most observers expect increased pressure in the coming years from rising regulatory activity, fee compression and the high cost of technology. Eighty-one percent of fund managers stated they had increased resources deployed to technology and big data, while 57% of managers surveyed said they had experienced an increase in the level of regulatory oversight.

“The regulatory burden on the industry is a symptom of a lack of trust. Rebuilding that trust means more focus on the long term. Without a clear sense of purpose, you can end up being just another one of 500 firms fighting for elbow room in an ever-more-challenging environment,” said Collie.

BlackRock remains the largest asset manager in the rankings, a position it has held since 2009. Meanwhile, Vanguard and State Street complete the top three for a fifth successive year.

The world’s largest money managers — ranked by total AuM in U.S. millions as of December 31, 2018

Rank Fund Market Total assets
1 BlackRock U.S. $5,975,818
2 Vanguard Group  U.S. $4,866,611
3 State Street Global U.S.  $2,511,297
4 Fidelity Investments U.S. $2,424,697
5 Allianz Group Germany $2,242,972
6 J.P. Morgan Chase U.S. $1,987,000
7 Bank of New York Mellon U.S. $1,722,000
8 Amundi France $1,714,466
9 Capital Group U.S. $1,677,381
10 AXA Group France $1,628,579
11 Goldman Sachs Group U.S.  $1,542,000
12 Prudential Financial U.S. $1,377,269
13 Deutsche Bank Germany $1,301,633
14 Legal & General Group U.K. $1,288,660
15 UBS Switzerland $1,222,839
16 BNP Paribas France $1,175,816
17 Northern Trust Asset Management U.S. $1,069,400
18 Wellington Management U.S. $1,003,389
19 Wells Fargo U.S. $964,700
20 T. Rowe Price U.S. $962,300

About the Thinking Ahead Institute

The Thinking Ahead Institute was established in January 2015 and is a global not-for-profit investment research and innovation member group made up of engaged institutional asset owners and service providers committed to changing and improving the investment industry for the benefit of the end saver. It has over 40 members around the world and is an outgrowth of Willis Towers Watson Investments’ Thinking Ahead Group, which was set up in 2002.

Media contact

Ed Emerman: +1 609 275 5162