The research and analytics firm has taken a guess at how fast the assets of the world's investment industry will grow this year.
Global assets under management, which rose 4.1 per cent in 2020 and 10.3 per cent a year earlier, are slated to expand 5.8 per cent this year, showing how the sector has pushed through the COVID-19 pandemic, Cerulli Associates predicts.
The coronavirus pandemic has encouraged saving, and more individuals, especially younger people, have shown interest in investing over the past year, the analytics and research firm said in a new report, Global Markets 2021: Continued Growth in Uncertain Times.
“COVID-19 has had less of an impact on the global asset management industry than many expected at the start of the pandemic,” André Schnurrenberger, managing director, Europe at Cerulli Associates, said. “Assuming that the coronavirus outbreak is brought under control, we expect AUM in the US to continue growing; we also expect non-US assets to keep increasing over the next five years, with a growing middle class and improved financial literacy fuelling demand in developing markets.”
To back up its point, Cerulli cites the rise in the client base of Hargreaves Lansdown, the UK’s largest direct-to-consumer platform. The base stood at 1.5 million in February 2021, up 84,000 from June 2020.
To put these figures into context, assets under management at the world’s 500 largest asset managers reached over $100 trillion for the first time in 2019 - totalling $104.4 trillion – according to new research from a think tank linked to Willis Towers Watson. That figure represented a rise of 14.8 per cent on the previous year when total AuM was $91.5 trillion and an almost threefold increase from $35.2 trillion in 2000, the Thinking Ahead Institute said.
Pressures and the US
Fee pressure generally remains a challenge for asset managers, Cerulli Associates said.
In the US, for example, managers continue to face fee compression because investors now have several ways of accessing lower-cost products - through a change in provider, new share classes, or exposure to strategies through different vehicles. Managers face high buyer power, low supplier power, strong existing competition, high threat of substitution, and high threat of new entry, Cerulli added.
As reported in June, Moody's, the rating agency, said the outlook for the world’s asset management industry has improved since the pandemic-induced fears of last spring, buoyed by heightened investor risk appetite. It has been fuelled by inflows into index-tracking funds, private market assets and ESG strategies. Moody’s said in a report that it has revised its outlook to “stable” from the “negative” outlook which had been in place since March last year - the month when the COVID-19 pandemic crisis sent markets crashing.