Willis Towers Watson reported Monday that total assets under management by the world’s 500 biggest money managers increase to $81.2 trillion last year, a rise of 5.8% from 2015.
“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,” Luba Nikulina, global head of manager research at Willis Towers Watson, said in a statement.
Last year’s report found that total assets under management by the biggest firms had declined by 1.7% from 2014.
Assets managed by North American firms grew by 7.7% to $47.4 trillion at the end of 2016. European managers’ assets, including those managed by U.K. firms, increased by 2.8% to $25.8 trillion. However, U.K.-based firms experienced an asset decline of 4.5% to $6.3 trillion.
The latest figures showed that 78.4% of total assets were managed actively, a drop from 79.7% in 2015 as passive management continued to make inroads.
“While passive assets remain significantly smaller than actively managed assets, the proportion of passively managed assets has grown from 16.5% to 21.6% over the last five years alone,” Nikulina said. “We expect that 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.”
Willis Towers Watson conducted the research in conjunction with Pensions & Investments.
20 Largest Managers
The world’s top 20 managers’ assets under management grew to $34.3 trillion in 2016, up 6.7%. By comparison, the top 20’s assets totaled $26 trillion in 2007, dropping to $20.5 trillion the following year.
In addition, the elite group’s share of total assets increased for the third consecutive year, rising from 41.9% to 42.3% in 2016. The bottom 250 managers’ assets grew by an even faster 7.3% in 2016 to $4.8 trillion, raising their share of total assets to 5.9%.
U.S. managers, comprising 13 of the top 20, increased their share of total assets to 73% in 2016, while the number of European/U.K. managers held steady at seven, a 27% share. No Japanese firms were in the elite group this year.
The 2016 top 20 ranked members included 10 independent asset managers, seven banks and three insurer-owned managers.
The new research found that as in past years, equity and fixed income assets continued to dominate, with a 78.7% share of total assets. This broke down to 44.3% equity and 34.4% fixed income, an increase of 3% combined during 2016.
Assets in alternatives increased by 5.1% last year from the strong growth they experienced in 2015. Equities followed, up 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,” Nikulina said.
“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.”
Nikulina said her firm’s research also highlighted awareness in sustainable investing, with 78% of the firms surveyed acknowledging increasing interest from their clients for these sorts of strategies as they continued to look for ways to add value for their clients.
Following are the top 20 money managers, ranked by assets under management:
20. Nuveen, U.S.: $882 billion