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Global assets under management (AuM) in the asset and wealth management sectors are expected to almost double from $84.9trn in 2016 to $145.4 trn by 2025, led by growth in Latin America and Asia Pacific, according to a new report by PwC.
The biggest growth is expected in active management, which is forecast to reach $87.6 trillion by 2025 from $60.6 trillion in 2016, thereby constituting 60% of global AuM. Passive management is expected to grow to $36.6 trillion from $14.2 trillion, making up 25% of global AuM.
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By GlobalDataAlternative asset classes, mainly real assets, private equity and private debt, are expected to grow to $21.1 trillion by 2025 from $10.1 trillion in 2016, constituting 15% of global AuM.
The study also forecast a dramatic rise in the industry’s involvement in trade finance, peer-to-peer lending and infrastructure. Notably, infrastructure assets are projected to increase from $0.6 trillion in 2016 to $3.4 trillion in 2025, with annual growth rate of 27.5% from 2016-2020 and 15% from 2020-2025.
In North America, assets are expected to grow from $46.9 trillion to $71.2 trillion over the period. However, the annual growth rate is expected to slow to 4% from 2020 to 2025 after growing 5.7% from 2016 to 2020.
In Europe, assets are predicted to increase from $21.9 trillion to $35.7 trillion. The annual growth rate in this region is expected to be 8.4% and 3.4% respectively over the two periods.
In Asia-Pacific, assets are projected to surge from $12.1 trillion to $29.6 trillion, with annual growth rate of 8.7% from 2016 to 2020 and 11.8% from 2020 to 2025.
In Latin America, assets are expected to grow from $3.3 trillion to $7.3 trillion, with growth rates of 7.5% per year from 2016 to 2020 and 10.4% from 2020 to 2025.
PwC global asset and wealth management leader Olwyn Alexander said: “Asset managers can take advantage of this massive global growth opportunity if they’re innovative. But it’s do or die, and there will be a ‘great divide’ between few have’s and many have not’s. As a result, things will look very different in five to ten years’ time and we expect to see fewer firms managing far more assets significantly more cheaply.”