Top asset managers lost money last year, reports Towers Watson

Consultant Towers Watson has reported that assets managed by the world’s 500 biggest fund managers lost 3% in 2011, taking assets back to $63trn, a level last seen in 2006.

The biggest 20 managers out of this group lost proportionately even more – 7% – according to the findings of the Towers Watson World 500 report.

The research, done together with US investment newspaper Pensions & Investments, showed that there are 11 US managers in that group of 20, eight are European, and one is Japanese.

Craig Baker, global head of research at Towers Watson Investment, said: “The largest 20 asset management firms were the biggest losers in 2011 with their share of assets falling significantly and reversing a strong growth trend of the past two years. The pressure is back on asset managers as performance fees dry up in falling markets and clients demand concessions on fees as well as exploring lower cost options. Although managers that have learned the lessons of the last few years – those of tight overhead control, reducing product proliferation and better aligning fees – are more likely to have remained profitable.”

Top 20 asset managers ranked by total global AuM – 31/12/2011   
RankManagerMarketTotal assets (US$ millions)
2Allianz GroupGermany2,117,123
3State Street GlobalUS1,856,852
4Vanguard GroupUS1,848,488
5Fidelity InvestmentsUS1,715,910
6J.P. Morgan ChaseUS1,341,463
7Bank of New York MellonUS1,260,298
8BNP ParibasFrance1,205,775
9Capital GroupUS1,081,659
11Prudential FinancialUS900,666
12Amundi Asset Mgmt.France852,788
13HSBC HoldingsUK847,000
14Goldman Sachs GroupUS828,000
16Deutsche BankGermany703,766
17Nippon Life InsuranceJapan693,328
18Franklin TempletonUS670,255
19Northern Trust GlobalUS662,900
20AXA GroupFrance661,366

The research also shows that the share of assets managed by businesses based in developing countries have more than doubled to 5% of total assets over the past decade.

The assets managed by the top 20 managers in that period have also doubled, to some $25trn.

Overall distribution of assets have shifted towards US, Canadian and French managers, who have increased their market share by 6%, 3% and 2% respectively.
In contrast, Swiss, Japanese and UK managers have lost 6%.

According to the research, asset managers from developing countries have more than doubled their share of total assets to around 5% during the past ten years. During the same period, assets managed by the top 20 managers have almost doubled to around US$25 trillion. The research shows how the distribution of assets has shifted in the past ten years, favouring US, Canadian and French managers which have grown share by 6%, 3% and 2% respectively; while Swiss (-6%), Japanese (-3%) and UK (-2%) managers have lost market share.

Another key trend is the growth in passive assets. These have grown by 12% annually on average, compared to the 5% growth in assets across the full range of 500 biggest managers.

Craig Baker said: “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 which 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.”

To read the full report click here: [asset_library_tag 5993,Towers Watson Report]

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