Sliding equity markets worldwide led to an 18% decline in global professionally managed assets in 2008, to $48.6 trillion, according to a Boston Consulting Group report.
The decline followed average growth of 12% per year from 2002 to 2007.
The average money manager's profit fell to 34% of net revenue at the end of 2008 from 38% a year earlier.
About 80% of asset managers experienced profit declines in 2008, and about 70% also saw declines in revenue.
The report speculates that the current financial crisis will make investors more deliberative and conservative in selecting money managers. Institutional investors will continue to diversify and seek innovation to achieve this goal.
“To improve net returns on their remaining equity allocations, they will likely push to negotiate lower fees and move from active toward passive management,” the report states. “The growing sophistication of institutional investors and the deepening complexity of their needs mean that asset managers will have to offer such investors increasingly customized approaches.”
