More evidence of greater retail-investor activity through the Covid-19 pandemic emerges in research that shows how the asset management industry strongly recovered during 2020.
Retail portfolio sizes grew by 11% and came to represent 41% of global assets under management (AUM) with $42 trillion (€35.4 trillion).
Institutional investments grew at a similar pace to reach $61 trillion, or 59% of the global market.
Boston Consulting Group (BSC) said in a report that the asset management industry emerged “strong” from the pandemic, crossing the $100 trillion threshold.
Strong net flows globally – especially from retail investors – of $2.8 trillion, and market growth, meant global AUM grew by 11% to reach $103 trillion in 2020.
The inflows were equal to 3.1% of the year’s opening AUM and compare to a 1-2% historical average over the previous decade
Operating profits did not grow, however, but did remain stable at around 34% of net revenues. Cost pressure and fee contraction were to blame, according to BCG’s report called ‘Global Asset Management 2021: The $100 Trillion Machine’.
AUM growth in the UK was 10%; Europe also saw 10%; Asia-Pacific 11%; and the Middle East and Africa 12%.
Lubasha Heredia, a BCG partner and co-author of the report, said: “The next big task for all industry players will be to carve out a suitable growth strategy as they refocus on the core areas of differentiation and advantage, which could be any combination of client engagement models, investment products, operating models, or talent strategy.”
BCG also said 2020 saw strong performance from alternative investments, with AuM growing by 11% for the year and capturing 40% of the industry’s revenue despite representing only 15% of global AuM.
