According to BCG’s study of the worldwide asset-management industry, total assets under management rose to $62.4 trillion in 2012, surpassing the 2007 record of $57.2 trillion. Operating margins rose to 37 per cent of net revenues, while profit increased to $80 billion, remaining 15 per cent below levels measured prior to the financial crisis.

The growth in AuM clearly reflects a recovery largely driven by the rise of global equity and fixed-income markets, the report said. This shifting investment focus has in turn pushed up the value of securities underlying managers’ assets, rather than by net new asset flows. Likewise, the increase in new asset flows remained relatively modest, totalling just 1.2 per cent of global AuM in 2012.

A key finding of the report is the structural shift which the market is currently undergoing. Most new flows have moved to solutions, specialties, and passive asset classes, providing growth in the non-traditional sector and outpacing traditional actively-managed core assets. Meanwhile, 25 per cent of traditional managers even reported significant erosion of their core-asset base in 2012, despite the broad recovery of AuM.

“That ongoing structural shift has heightened questions about the future of traditional managers,” said Gary Shub, BCG partner and co-author of the report.

“For the remaining traditional managers, the urgent need for change is obscured by strong revenues from the installed asset base, but investment in new higher-growth capabilities is no less critical.”

In this light, the report suggests that traditional managers become "ambidextrous" and stabilise their existing core asset base while broadening their scope of investments to new faster-growth assets, such as solutions and specialties. In this part of the sector, specialists and ambidextrous players have enjoyed a 10 per cent profit increase per annum since 2012, while traditional players saw yearly profit losses of 2 per cent in the same period.

Major markets players have especially benefited from following the trend towards non-traditional products. In the report’s top 10 ranking of asset managers in the US and Europe, it is clear that focusing a majority of investments on specialties across equity and fixed income, has boosted revenue levels considerably.

Furthermore, firms are increasingly looking at bringing down costs, as traditional core assets are eroding. With a growing need for industry players to invest in capabilities the BCG report recommends tightly managing the cost structure in order to free up assets.

“Reviewing the operating model, with a focus on operations and IT, is a growing source of strategic advantage,” said Brent Beardsley, a co-author and BCG partner, who is global leader of the firm’s asset and wealth management segment.

“Beyond boosting efficiency, a review can be the key to flexibility, scalability, and future growth.”

The report, which covers more than 98 per cent of the global asset management business, also revealed disparities in regional market developments. Having focused on speciality capabilities, US-based asset managers outperformed European counterparts, with US profits rising 10 per cent above 2007 levels. In comparison, European managers’ profits remained 31 per cent below pre-crisis levels.

In this respect, asset managers continue to confront a two-speed world in which the smaller, rapidly developing markets grow faster than the developed markets, with higher net flows. At the same time, AuM growth in the developed markets was significantly greater in absolute terms because of the dominant size of those markets.

AuM growth was especially noticeable in Asia, excluding Japan and Australia, which saw a 17 per cent increase in 2012. Latin America also performed strongly with 14 per cent growth in assets under management, while the Middle East and South Africa grew 12 per cent.

According to BCG, the study covered 120 leading industry players managing a total $33 trillion, or 53 per cent of global AuM.