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AUM growth to 2025: “Strong not stellar”

AUMResearch among nearly 2,000 asset managers globally is said to show that estimates for the industry’s growth in assets under management (AUM) are “overinflated” – but also that the UK will see the most increase apart from Asia.

Bloomberg Intelligence and Simmons & Simmons − the firms that produced the research − said managers expected 21% growth in AUM to 2025 which “demonstrates an expectation for strong, not stellar, growth that is in contrast to some more aggressive forecasts”.

Higher forecasts include from PWC, which in a 2017 report estimated global AUM to grow to $145.4 trillion (€127.8 trillion) by 2025 at an annualised rate of 6.2% per year. That equates to a growth from mid-2018 – the reference point for the latest research - of 52%.

Another finding of the latest research was that, “surprisingly” due to Brexit, the UK is expected to experience 22% AUM growth – ahead of the US and Europe and close to the level of Asia-Pacific which has the highest growth rate across the globe. 

Despite the positive outlook fee income is expected to grow more slowly (only 8%) over the same period, which means a further fall in fee margins of 11% and will “undoubtedly” mount further pressure on profitability.

The survey revealed that over a quarter (27%) of respondents expressed enthusiasm to expand offerings into alternative investment styles in a bid to capture higher fees and increase overall proceeds.

Similarly, almost a fifth of traditional fund managers cited a move to actively managed strategies with higher fees as their most likely change, after several years of losing investors to cheaper, passive alternatives.

Sarah Jane Mahmud, a senior regulatory analyst at Bloomberg Intelligence, said the survey showed that asset managers recognise it will be challenging to maintain AUM, particularly in light of regulatory reform and supervisory scrutiny.

“Their response to those challenges will dictate the evolution of the industry– so it’s clear that this will be an extremely influential period,” Mahmud added.

The findings are contained in a report called ‘Asset management outlook to 2025’.

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