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Global Industry report: Asset managers revise AUM growth

Global AUM riseThe asset management industry may have to revise projected growth in assets under management (AuM) due to the economic slowdown of recent years.

In Funds Europe’s Global Industry Report (now available online) we revisit a projection from PwC in 2015 that predicted AuM in the global asset management industry would reach a record $101.7 trillion by 2020 from a 2012 total of $63.9 trillion.

The report, ‘Asset Management 2020: A brave new world’, also predicted a compound annual growth rate for AuM of nearly 6%.

But a slowdown in the world’s economy since the report was published looks to have dented those heady predictions. According to a report from Willis Towers Watson the global AuM of the world’s 500 largest fund managers fell 3% in 2018 to $91.5 trillion.

Steve Edgley, head of institutional for Europe at Fidelity International, now expects a base growth rate of between 1% and 3% a year over the medium to long term.

“It’s fair to say we would assume lower growth rather than higher in the coming years,” he says. “There will be some variability around market returns generally, but for now, we expect flat to steady growth going forward.”

Taimur Hyat, chief strategy officer of $1.3 trillion US funds giant PGIM, believes that technological developments – for example in automation, natural language processing and ocular recognition – will continue to transform the middle and back-office functions of the industry.

“Technology is one of the big trends impacting the industry,” he says. “Some pretty fundamental parts of the asset management value chain will be impacted by it.

“Digital transformation has been one of the foremost important strategic priorities for PGIM over the last 18 months and we have new people across the businesses dedicated to it.”

The challenge for the industry, Hyat says, will be how to make greater use of data analytics without upsetting the investment processes and the delivery of “good alpha”.

“How you take all these new data sources and analytics and deal with the culture clash between data scientists and the classic fundamental portfolio managers and make it a useful additional tool for the portfolio manager will probably be the hardest challenge for asset managers,” Hyat says.

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