Companies in this industry manage the financial assets of corporate, institutional, and individual clients. Major companies include BlackRock, Fidelity Investments, State Street Corporation, and Vanguard (all based in the US), as well as Allianz Group (Germany), Amundi (France), and UBS Group (Switzerland). In addition, most major banks have asset management divisions.
Worldwide, companies in the industry had about $79 trillion of assets under management as of 2017, according to Boston Consulting Group (BCG). The US and Canada together accounted for nearly half of that total. Other leading countries for the industry include the UK, Germany, the Netherlands, Australia, South Korea, and Japan.
The US asset management industry includes about 57,000 establishments (single-location companies and units of multi-location companies) with combined annual revenue of about $325 billion. The industry includes hedge funds, financial advisers, mutual funds, and venture capital firms, all of which are covered in separate industry profiles. Investment banks and securities brokerages, which are not included in the industry, also are covered in separate profiles.
Demand is driven by demographic and market trends such as the growing population of retirees and the accumulation of wealth and investable assets, as well as returns on investments. The profitability of individual companies depends on the volume and performance of the assets they manage. Large companies have advantages in providing expertise in a wide range of investment options. Small companies can compete by focusing on a single product or type of client. The US industry is concentrated: the 50 largest firms account for about 50% of revenue.
The asset management industry has emerged from the aftermath of the late-2000s financial crisis and is in the midst of a major transformation brought about by economic, technological, and demographic changes. A structural shift in products is underway, to the detriment of traditional management firms. Increasingly, alternative managers (private funds and hedge funds) are expanding into products historically provided by traditional asset managers. Enhanced competition also puts pressure on fees, the primary source of revenue for most firms. Traditional active core assets are being squeezed and are losing share to passive investment products, according to BCG. In response, many asset management firms are re-evaluating their strategies and business models.
Another source of disruption for traditional asset managers is the growing number of financial technology (fintech) companies. These companies, which use technology to deliver financial services more efficiently and at lower cost, are luring millennial investors away from traditional asset managers.
Products, Operations & Technology
Major services include portfolio management and investment advice. Firms use diverse business models and manage a variety of assets, including mutual funds,
Sales & Marketing
Finance & Regulation
Regional & International Issues
Also includes the following chapters:
Quarterly Industry Update
Trends and Opportunities
Call Preparation Questions
Glossary of Acronyms