Global assets under management are back to where they were in 2007, with total AUM reaching $53 trillion at the end of 2010, according to Cerulli Associates. The Boston-based research firm notes that while it took less than six months to wipe out some $10 trillion in AUM in 2008 and the beginning of 2009, it has taken the better part of two years to put that back.
Cerulli says it believes that total AUM could reach $76 trillion by 2015, which suggests a five-year compound annual growth rate of 7.5%. This is marginally higher than Cerulli’s forecast from 12 months ago, but lower than the 8.6% five-year CAGR estimated in 2008.
While global assets recovered to 2007 levels in 2010, the same can’t be said for revenues, which rose $12 billion to $162 billion at the end of 2010, $10 billion off the 2007 level of $172.6 billion.
Pressure From Several Places
Cerulli writes that pressure on revenues is going to come from several places: reallocation from equities to fixed income and cash; reallocation from active to passive and low-cost active; and the continued threat of competitive alternatives to mutual funds, and collectives in general.
Several of the largest asset managers had a much better 2010 in terms of profitability. However, there were many more that had a much tougher year with flows concentrating in a small number of funds leading to a polarized market environment. Growth may be back on the agenda, but not at any cost (like it was in the pre-financial crisis days), and with a strong focus on bottom-line growth, not just top-line growth.
According to the firm, the United States remains the world’s largest, and most mature, asset management marketplace and is likely to continue to see slower growth than other regions. At the other end, Asia (ex-Japan) continues to head the leader board, but 2010 was anything but plain sailing, largely on account of an extremely volatile Chinese asset management marketplace.
Turning to Europe
Cerulli’s prognosis for Europe, beset by deep-seated economics woes, is slower asset growth. This is reflected in the firm’s five-year growth forecasts, which are down from a high of 10.3% in 2008 to the current estimate of 7.7% to 2015. Yet, this masks strong growth from markets like the United Kingdom and others in northern Europe, creating what the firm calls a “two-speed Europe.”
Overall mutual fund growth in 2010 was almost half that in 2009, and were it not for an 8% growth in market appreciation, overall growth would have been negative, with the year ending with negative flows of 0.4%.