Asset managers have in some ways only scratched the surface of what can be potentially done in the Asia-Pacific sector, a consultancy argues.

Asset manager revenues in the Asia-Pacific region are reportedly on course to almost double their revenues to $112 billion over the coming five years, as the rising emerging market wealth, financial reforms in China and other forces propel growth.

The study, by McKinsey said the share of wealth managed by third-party managers will rise, because almost 90 per cent of Asian financial assets sit outside the fund management sector, which is far lower in relative terms than in the US or Europe (source: Financial Times).

Ageing in developed economies such as Japan, Australia and Taiwan will mean at least $1.2 trillion of new business will come asset managers’ way in the next five years, the report said. An additional $2 trillion in new business could come from increased demand for investment services because of increasing affluence in India and Southeast Asia, the report said.

This publication has asked McKinsey to confirm details and add comments; it may update in due course.

The report will cheer those who have seen margins come under pressure in the global asset management sector as a result of the trend towards more “passive” index-tracking products, which typically charge a low fee, and away from active managers. Disenchantment with active fund fees when markets have risen anyway on the back of central bank money printing has been a factor.

McKinsey’s report follows its regular snapshot of Western Europe’s private banking sector, showing that after a tough period, profits rose in 2017, collectively standing at €15 billion ($19.7 billion). That study cautioned that the average annual growth of 5.7 per cent in profits was almost entirely driven by rising assets under management, carrying the risk that if AuM growth stalls, profits will suffer.

A report by PricewaterhouseCoopers this year said asset managers worldwide were broadly upbeat, but fretted about regulations.