Passively managed assets continue to gain share of total assets at the expense of active management
ARLINGTON, VA, October 30, 2017 — Total assets under management (AuM) of the world’s largest 500 managers grew to $81.2 trillion in 2016, representing a rise of 5.8% on the previous year, according to latest figures from leading global advisory, broking and solutions company Willis Towers Watson’s (NASDAQ: WLTW) Global 500 research.
The research, which takes into account data up to the end of 2016, found that AuM for North American managers increased by 7.7% over the period and now stand at $47.4 trillion, while assets managed by European managers, including the U.K., increased by 2.8% to $25.8 trillion. However, U.K.-based firms saw AuM decline for the second consecutive year, falling by 4.5% in 2016 to $6.3 trillion.
Although the majority of total assets1 (78.4%) are still managed actively, that share has declined from 79.7% from end of last year as passive management continues to make inroads.
“It is encouraging to see a return to growth in total global assets, suggesting that managers are finding success in attracting investors toward innovative solutions to achieve superior risk-adjusted returns,” said Brad Morrow, head of Manager Research in the Americas, Willis Towers Watson. “While passive assets remain significantly smaller than actively managed ones, the proportion of passively managed assets has grown from 16.5% to 21.6% over the last five years. We expect this trend will continue to put downward pressure on traditional fee structures, particularly among active managers seeking to remain competitive and to maximize value to investors.”
The 20 largest asset managers experienced a 6.7% increase in AuM, which now stands at $34.3 trillion, compared with $26.0 trillion 10 years ago and $20.5 trillion in 2008. The share of total assets managed by this group increased for the third year in a row, rising from 41.9% in 2015 to 42.3% by the end of 2016. Despite this, the bottom 250 managers experienced a superior growth rate in assets managed, rising by 7.3% over the year.
As with previous years, equity and fixed income assets continued to dominate, with a 78.7% share of total assets1 (44.3% equity, 34.4% fixed income), experiencing an increase of 3% combined during 2016. Continuing from the strong growth they experienced in 2015, assets1 in alternatives saw a 5.1% increase by the end of 2016, closely followed by equities at 4.1%.
“Alternatives continue to grow in popularity, with investors remaining under pressure to find effective means of diversification in an environment of lower expected returns from traditional asset classes. These strategies often come with greater complexity and require superior risk management. We see this as linked to the growth in assets managed by managers in the bottom half of our list, suggesting that investors favor smaller investment houses with specialist investment skills.”
“Our research has also highlighted awareness in sustainable investing, with 78% of the firms surveyed acknowledging a growing interest from their clients for these sorts of strategies as they continue to look for ways to add value for clients,” said Morrow.
While BlackRock retains its position at the top of the manager rankings for the eighth consecutive year, further insight shows the main gainers, by rank, in the top 50 during the past five years include Dimensional Fund Advisors (up 31 positions, from 76 to 45), Affiliated Managers Group (up 20 positions, from 52 to 32), Nuveen (up 16 positions, from 36 to 20), New York Life Investments (up 15 positions, from 55 to 40) and Schroder Investment Management (up 15 positions, from 59 to 44).
The world’s largest money managers
Ranked by total assets under management, in U.S. millions, as of Dec. 31, 2016
| Rank | Manager | Country | Total assets |
| 1 | BlackRock | U.S. | $5,147,852 |
| 2 | Vanguard Group | U.S. | $3,965,018 |
| 3 | State Street Global | U.S. | $2,468,456 |
| 4 | Fidelity Investments | U.S. | $2,130,798 |
| 5 | Allianz Group | Germany | $1,971,211 |
| 6 | J.P. Morgan Chase | U.S. | $1,770,867 |
| 7 | Bank of New York Mellon | U.S. | $1,647,990 |
| 8 | AXA Group | France | $1,505,537 |
| 9 | Capital Group | U.S. | $1,478,523 |
| 10 | Goldman Sachs Group | U.S. | $1,379,000 |
| 11 | Prudential Financial | U.S. | $1,263,765 |
| 12 | BNP Paribas | France | $1,215,482 |
| 13 | UBS | Switzerland | $1,208,275 |
| 14 | Deutsche Bank | Germany | $1,190,523 |
| 15 | Amundi | France | $1,141,000 |
| 16 | Legal & General Group | U.K. | $1,099,919 |
| 17 | Wellington Mgmt. | U.S. | $979,210 |
| 18 | Northern Trust Asset Mgmt. | U.S. | $942,452 |
| 19 | Wells Fargo | U.S. | $936,900 |
| 20 | Nuveen | U.S. | $881,748 |
Source: P&I/Willis Towers Watson World 500
Footnotes
1 Based on a subset of asset managers in the 2016 ranking who provided relevant data for all years since 2012.
About Willis Towers Watson Investments
Willis Towers Watson’s Investments business is focused on creating financial value for institutional investors through its expertise in risk assessment, strategic asset allocation, fiduciary management and investment manager selection. It has over 900 colleagues worldwide, assets under advisory of over US$2.3 trillion and over US$87 billion of assets under management.
About Willis Towers Watson
Willis Towers Watson (NASDAQ: WLTW) is a leading global advisory, broking and solutions company that helps clients around the world turn risk into a path for growth. With roots dating to 1828, Willis Towers Watson has 40,000 employees serving more than 140 countries. We design and deliver solutions that manage risk, optimize benefits, cultivate talent, and expand the power of capital to protect and strengthen institutions and individuals. Our unique perspective allows us to see the critical intersections between talent, assets and ideas — the dynamic formula that drives business performance. Together, we unlock potential. Learn more at willistowerswatson.com.
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