A silver cloud with a grey lining

upward_graph_410Global assets under management stand at €35 trillion - around the same level as in 2007 at constant exchange rates. But McKinsey & Co, the consultancy, says this may look like an encouraging rebound, 'but delve a little deeper and the situation looks far more worrying'.

Why? Because the rebound is entirely due to market performance, so although stock markets may have risen since 2007, investor confidence appears to have a long way to go.

McKinsey recently published its thirteenth annual survey about the European asset management industry. The report says a mere 0.02% of the 2010 recovery comes from inflows.

Even more disturbing than the lack of inflows, is the loss of market share. Over this three-year period, both institutional and retail investors turned away from asset managers and sought alternative investments. Asset managers’ share of both these segments fell globally 1–2 percentage points.

Despite losing market share, however, it was still the institutional segment that generated what inflows there were. In mature markets, only in the UK, Japan and Australia did retail inflows outstrip institutional from 2008 to 2010. Globally, the institutional segment generated cumulative inflows of €363bn, while retail generated outflows of €336bn.

McKinsey also found that although profitability in European asset management has picked up, performance varies “enormously” between firms.

Winning players in recent years have tended to be institutionally focused and independent asset managers.

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