Top 500 asset managers experience $18trn drop in assets

Written by Adam Cadle

23/10/2023

The total assets under management (AuM) of the world’s 500 largest investment managers fell by 13.7% year-on-year between 2021 and 2022, according to research by the Thinking Ahead Institute (TAI).

The TAI noted that the asset reduction, from US$131.7trn at the end of 2021 to US$113.7trn at the end of 2022, was the first significant fall in assets managed since the 2008 financial crisis.

Its research highlighted regional differences, with Japanese managers within the top 500 faring better than average, with a 5.5% decrease in assets.

By comparison, North American asset managers saw a 14.2% fall in assets and Europe experienced an above-average 16.8% reduction.

There was a continued evolution in active versus passive AuM, with passively managed funds accounting for 34.7% of the total, up by four percentage points, leaving the remaining 65.3% as actively managed funds.

Among asset classes, the decline in equity and bond markets caused a ‘gentle shift’ in weightings, with alternative investments rising to 7.1% of assets managed.

The combined equity and fixed income allocation decreased by 2.4 percentage points following a stable 79% to 80% share over the previous 10 years.

The TAI noted that, as it is hard for very large managers to have an above average exposure to less liquid asset classes, the top 20 managers were disproportionately hit by the mainstream market falls.

The top 20 managers’ share of the total assets fell from 45.2% to 44.2% over the year, with their total AuM decreasing to US$50.3trn.

BlackRock remained the world’s largest asset manager, despite a drop in AuM from just over US$10trn to just over US$8trn in 2022.

“Throughout 2022, amidst significant turbulence, high inflation and interest rates, and geopolitical tension, investors have faced losses that effectively erased most of the gains achieved during the record-breaking 2021,” commented TAI director, Jessica Gao.

“As we have conducted this research, a common theme throughout our conversations with managers has been to expect a higher-for-longer regime in interest rates in which concerns about inflation and growth remain elevated, suggesting investment managers are not out of the woods yet.

“The need to consider sustainability issues and adapt to systemic risk means forward thinking and robust investment processes that are able to model and measure risks like never before.

“Looking ahead, this awareness of system-level risks could offer support to the investment world as it grapples with the generational challenge of climate change impacts and other sustainability issues.”

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