Active management on the rise, but the pace is lagging behind

Global fund managers executing both passive and active strategies saw passive assets grow faster than active strategies in 2017, amid demographic and technological changes destined to reshape the fund management industry.

The leading passive managers in this group offering both active and passive strategies grew 19.5% in 2017 to $ 19.89 trillion in assets under management, compared with a 15.6% growth in assets under management. management among the top 500 fund managers in the world, the latest ranking of Pensions and investments and performances by the Willis Towers Watson Thinking Ahead Institute.

Research of the world’s top 500 fund managers showed total assets to reach $ 93.8 trillion in the fiscal year ended Dec.31.

Active strategies continued to dominate among the top 500 companies offering both active and passive strategies, accounting for 77.6% of total assets, or $ 72.8 trillion. However, active assets grew 16.9% from 2016, growing at a slower pace compared to passive assets in this group, which grew 25% during the year.

The growth of the top passive fund managers in 2017 compared to an increase of 9.9% in 2016. Over the past 10 years, the top 20 passive managers have seen their total assets grow at a compound annual growth rate of 9 , 5%. For all 500 companies, the 10-year annual asset growth was 3.1%, according to Bob Collie, head of research at the Thinking Ahead Institute in London.

“It’s no surprise there… the extent to which (assets) have grown is largely due to the stock markets,” Mr. Collie said. “There is a little more concentration in the top 20 managers as a proportion of the total. And there are more (assets) in the liabilities. If you look at the change from year to year they don’t matter, but when you look over 10 years these two trends tend to carry over in that direction. “

Mr Collie thinks statistics “disguise the big story” as the industry is about to face larger changes resulting from the interaction of technology with other global trends such as demographics and growth investment platforms. “The effects (of the interaction) have yet to be seen,” he said.

“When you add them up in total, it seems to us that the asset management industry is, at some point, about to undergo some sort of overhaul,” said Mr. Collie.

But “it doesn’t change overnight; it won’t be like the taxi industry, which can change very quickly,” he said. “Asset management can’t change very quickly.”