Across the US$100 trillion asset management industry, money managers have confronted a tectonic shift in investor appetite for cheaper, passive strategies over the past decade.
About 90 per cent of additional revenue taken in by money managers since 2006 is simply from rising markets, and not from any ability to attract new client money, according to Boston Consulting Group. Many senior executives and consultants now warn that it will not take much to turn the industry’s slow decline into a cliff-edge moment. One more bear market, and many of these firms will find themselves beyond repair.
Also, with geopolitical tensions and higher interest rates becoming the status quo, even the US$9.1 trillion behemoth BlackRock is feeling some of the pain. In the three months to September, clients pulled a net US$13 billion from its long-term investment funds, the first such outflows since the onset of the Covid-19 pandemic in 2020.
The five publicly traded firms – which oversaw more than US$5 trillion as at June 30 for everyone from workers with 401 retirement savings plans to the biggest pension funds in the world, and have all been household names in global asset management for decades – were chosen as a representation for asset management’s middle tier, which is now facing immense pressure, with their struggles shared by most other players in the sector.
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