businesswoman drawing diagrams on wallSergey Nivens/Getty Images/iStockphoto
The world's asset management industry is finally driving out of its slump after spinning its wheels for four years.
Global assets under management have exceeded pre-financial crisis levels, climbing to $62-trillion (U.S.) invested in 2012, up from the 2007 peak of $57.2-trillion, according to an annual study done by the Boston Consulting Group.
But although conditions have improved, BCG warns that much of the asset gains came from the recovery of the global equity and fixed-income markets, and not efforts to generate new asset flows.
Equity markets made broad gains last year with the S&P 500 up 12 per cent in 2012 and another 15 per cent so far this year.
New money flowing into the industry accounted for just 1.2 per cent of global assets under management last year, notes the 2013 BCG study, which looked at 120 companies with about $33-trillion in AUM.
And those investors who are coming in the front door don't want the same old developed market bond or equity funds. "Most of those new flows moved to solutions, specialties, and passive asset classes rather than to the actively managed core assets of traditional players," the company said in its release.
These investors looked to target date funds, emerging market equities and high-yield bonds for growth, while alternative products such as hedge funds, and passive products such as ETFs squeezed the margins of more traditional players.
"A full quarter of traditional managers actually experienced significant erosion of their traditional actively managed core-asset base in 2012, despite the broad recovery of assets under management," the report notes.
So where does Canada fit into all this? It's one of the top 10 biggest countries that makes up 83 per cent of the world's total assets under management. Canada was the sixth largest country by assets under management, which climbed to about $2-trillion (Canadian) in 2012, according to some supplementary data provided by BCG.
That's a 6.4-per-cent increase over 2007, when the industry was $1.7-trillion strong.
One thing that hasn't changed is the division of wealth between retail money and institutional investors. The split was 44 per cent retail and 56 per cent institutional as of 2012, just like it was in 2007.
(Jacqueline Nelson is a Globe and Mail Financial Services Reporter.)
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