Employee-owned and publicly traded money management firms will gain the most market share over the coming five years, as separation of manufacturing and distribution brings about “the final act in asset management’s transition to a fully wholesale industry,” predicts a Putnam Lovell report on the future of the global fund management industry. The share of those firms should jump to 33% by 2012 from 24% in 2006, while the share of bank-affiliated managers drops to 36% from 42% and insurer-affiliated managers slips to 24% from 26% over the same period, Benjamin F. Phillips, managing director of strategic analysis for the investment bank, said in an interview.
Retirement-linked demand is also predicted to become less prominent as a source of growth, while wealthy individuals worldwide and new business from Asia and Australia will account for the majority of net new business by 2012.
The report also forecasts that revenues from alternatives strategies will grow from roughly 30% of overall revenues in 2006 to a bit more than 50% by 2012. Also, the continued growth of ETFs and other sources of cheap beta are expected to accelerate a shakeout in the hedge fund industry, with roughly 20% of the current crop of 10,000 hedge funds and fund of hedge funds firms “withering away” by 2012.
