Average assets under management (AuM) and the
economics of asset managers deteriorated for the second consecutive
year in 2009, although predicted profit margins could return to 35%
in 2010, according to Boston Consulting Group research.

Average AuM fell by 4%, and net revenues
declined by 11%, while operating margins fell by 19 percent in
2009.

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The report, In Search of Stable Growth:
Global Asset Management 2010, matched existing research
suggesting wealth and asset managers have to refocus their business
models by cutting costs and focusing on client service.

Growth opportunities for asset managers could
come from expanding abroad, developing new partnerships, and
enhancing offerings through mergers and acquisitions, the BCG
report added.

 

Passive pressure builds on active
managers

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The report said passively managed products
were growing more dynamically than actively managed ones, returning
to the historical pattern of traditional, actively managed products
being squeezed by the incursion of passive and alternative
offerings.

A survey of 23 respondents within the report
found fees were growing in equities (7-8%), structured products
(20%) and liability driven instruments/fiduciary solutions
(20%).

The report confirmed emerging markets will
likely represent more than 25% of net sales between 2010 and
2014.

“A key issue in the minds of many asset
managers is whether in the long term they can afford not to be in
countries such as India and China,” it said.

 

Other key figures included:

  • Value of professionally managed assets rose by 12% to $52.6trn
    in 2009. This increase followed a decline of 17% in 2008.
  • In 2010 average profit margins may rebound to as much as 35% of
    net revenues given higher anticipated levels of average AuM and a
    better expected product mix — compared with about 31% in 2009.
  • AuM rose 25% in Asia (excluding Japan and Australia) and 22% in
    Latin America.

 

BCG’s research focused on assets that are
professionally managed for fees in 34 countries and benchmarking of
top global asset managers with $24trn in AuM.