ARLINGTON, October 17, 2022 – Assets under management (AuM) at the world’s 500 largest asset managers reached a new record of over $131 trillion in 2021, according to new research from WTW’s (NASDAQ: WTW) Thinking Ahead Institute. This is an increase of over 10% on the previous year, when assets had grown by 14.5% to over $119 trillion.
The research also shows further concentration of assets managed by the very largest organizations. The world’s top 20 asset managers are now responsible for over $59 trillion of assets, having grown at an above-average annual rate of 13%.
In addition, the research reveals that BlackRock is both the world’s largest asset manager and the first to exceed $10 trillion. While the Vanguard Group is ranked second (breaking the $8 trillion mark), it is significantly ahead of Fidelity Investments and State Street Global — ranked third and fourth, respectively — each with around $4 trillion.
The dominance of U.S. managers is increasingly apparent at the top of the rankings; they now account for 15 of the 20 largest firms and around 82% of assets. This share is now boosted by U.S. managers Invesco and Wellington Management joining the top 20. More broadly, as a result of consolidation and competition, 218 manager names that featured in the ranking 10 years ago are now absent.
According to the research, passively managed funds grew by 12.1% during the year — faster than actively managed assets, which grew by 9.5% — and now account for over 29% of assets, hitting a record high. It also shows that equity and fixed income continued to make up the majority of assets, split by 46.5% and 33.9%, respectively. In addition, cash makes up 6.6%, alternatives 5.9% and other strategies 7.1% (which include liability-driven investment [LDI] and other specialist solutions).
“Investment managers are facing a combination of long-term headwinds from macroeconomic, geopolitical and climate risks — but are also spurred on by the driving factors of technology and industry innovation,” said Marisa Hall, co-head of the Thinking Ahead Institute. “This is a story of dark clouds on the horizon, potentially matched by a powerful engine room of innovation.
“Consolidation is an obvious symptom of a changing investment industry, but bigger is not always better. Specialism is still sought-after, with genuine boutiques and smaller global managers proving that standing out for the right reasons can be as strong a business model as offering standardization.
“Asset managers are adapting as organizations, and we’re seeing competitive pressures manifest in a reassessment of the skills and structures that drive success. For example, healthy scrutiny of sustainability claims is leading to enormous demand for climate and environmental specialists. Meanwhile, modern expectations for digital client service and a need for rigorous data-led investment processes is separately driving total reevaluations of operational technology. These trends mean we’re not seeing just a shift in the rankings but also a shift in what it means to be a successful asset manager.”
Following are additional research findings, from a subset of managers in the ranking:
- Assets allocated to environmental, social and governance principles increased by over four percentage points to reach over 60% of assets.
- Allocations to LDI strategies slowed marginally to around 13.9% of total assets invested in LDI strategies, from 14.2% a year before.
- A majority (56%) of managers increased the number of women, and those of other protected minority groups, in high positions.
- Technology and big data received additional resources among a strong majority (76%) of managers, while a similar 75% boosted their resources focused on cybersecurity.
- Product offerings are still expanding — with 72% increasing the number of investment products they offer to clients.
- Aggregate investment management fee levels decreased for a third (29%) and increased for 13% of managers.
