Total assets under management (AUM) by the world’s 500 largest fund managers grew to US$81.2 trillion in 2016, representing a rise of 5.8% on the previous year, according to a report published Monday from global advisory firm from Willis Towers Watson.
AUM for North American managers increased by 7.7% over the period to US$47.4 trillion, while assets managed by European managers, including the United Kingdom, increased by 2.8% to US$25.8 trillion.
However, U.K.-based firms saw AuM decline for the second consecutive year, falling by 4.5% in 2016 to US$ 6.3trillion, the report notes.
The compound annual growth rate for Canadian asset managers over the past five years is 12.1% in local currency terms, according to the report, but this drops to 6.1% in U.S dollar terms, given the strength of the U.S. dollar over the period.
The world’s 20 largest asset managers saw AUM increase by 6.7% to US$34.3 trillion, the report notes, pushing their collective share of total AUM to 42.3% from 41.9% in 2015. The share for the top 20 firms is up from US$26.0 trillion 10 years ago, and US$20.5 trillion in 2008.
Ranked by total AUM, U.S.-based BlackRock is the largest manager with US$5.1. Two other American firms, Vanguard Group and State Street Global, hold the second and third spots.
Sun Life Financial, the largest asset manager based in Canada, sits in 34th place, followed by Manulife Financial in 35th spot. Great-West Lifeco (GWL) ranks 41st and Royal Bank of Canada (RBC) sits in 46th position. GWL and RBC are among the biggest movers in the rankings, both up seven places from the previous year; Sun Life is up three spots.
Notwithstanding the growing share for the world’s top managers, the bottom 250 managers also enjoyed an above average growth rate of 7.3% year over year, the report notes.
The majority of total assets are still actively managed, according to the report, but that the share for active management has declined to 78.4% of total AUM from 79.7% at the end of 2015.
By asset class, 44.3% of total AUM are invested in equities, the report says and 34.4% in fixed income. Alternative AUM grew by 5.1% during the year, while equities rose by 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 favour smaller investment houses with specialist investment skills,” says Luba Nikulina, global head of manager research at Willis Towers Watson, in a statement.
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