The global growth of asset management stalled in 2015 as the industry recorded its worst year since the 2008 financial crisis, according to a new Boston Consulting Group (BCG) report.
The global value of AuM rose just 1% in 2015, to $71.4 trillion from $70.5 trillion in 2014. The figure rose by 8% in 2014 and averaged 5% growth between 2008 and 2014.
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Net new flows of assets, revenue growth and revenue margins all dropped lower in 2015, the report added.
The report attributed lack of overall growth largely to the generally negative and turbulent performance of global financial markets, which failed to buoy the value of invested assets as in prior years.
"Weak and turbulent global financial markets are today's reality — one recent example being the market response to Britain's 'Brexit' vote to leave the EU," said Brent Beardsley, a BCG senior partner based in Chicago, the global leader of the firm's wealth and asset management segment, and a coauthor of the report.
"Asset managers that depend on financial-market performance to drive increases in asset values are stuck in a model from the past," he added.
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By GlobalDataOverall profits remained relatively stable in 2015, but rose just 1% to reach $100bn, the BCG report says. However, profits as a percentage of revenues remained at a healthy 37% level, slightly below 2014.
The industry's regional growth, as measured by AuM, reflected in large part the performance of capital markets by region in 2015. AuM decreased in North America and the Middle East but rose elsewhere. Growth was modest in Europe and strong in Latin America and Asia, excluding Japan and Australia.
The 10% growth of AuM in Asia, excluding Japan and Australia, was relatively robust, but once again, it trailed the rapid expansion of the region's private wealth, according to the report.
Net new flows of assets also varied widely by region. Flows were tepid in the US but more robust in much of Europe and Asia-Pacific, where they reached almost 2.5% and 3% of 2014 AuM, respectively.
The report also found that advanced and sometimes disruptive technologies — including machine learning, artificial intelligence, natural-language processing, and predictive reasoning — are on the verge of joining the mainstream asset managers.
The authors of the report opined that asset managers' future prosperity and competitive advantage will require them to shift from outdated product strategies and develop disruptive investment capabilities using leading-edge data and analytics.
