Currency swings weren't a big factor in AUM changes during 2011, with the euro falling about 2% against the U.S. dollar. However, the yen's movement was slightly more dramatic, having appreciated against the dollar about 5.5% in 2011, helping to boost Japanese fund managers' AUM in U.S. dollar terms, Mr. Baker said. Assets managed by Japanese managers totaled $5.3 trillion, a 6.4% increase.
Aggregate assets managed by U.S. managers shrank by 1.1% to $33.1 trillion, and European managers' AUM total fell 7% to $21.3 trillion. As a group, firms domiciled outside of the U.S., Europe and Japan increased their share of AUM to 5.3%, or $3.3 trillion, from 5.1% the previous year.
Assets managed by leading passive managers decreased by 1.4%.
“This is the first year in a while that (leading passive managers) haven't grown quicker than active,” Mr. Baker said. “Again, it's worth bearing in mind that people tend to do more passive management in equities than they do in bonds, so there's an element of that. Also, it wasn't a massive swing the other way. It was more of a break in the growth trend.”
However, continued pressure on fees will lead to more passive investments “whether it be on the traditional side or smart beta side,” said Mr. Baker, referring to smart beta as active exposure in strategies that require “real skill” that cannot be easily replicated systematically.
The top 20 managers' share of total AUM also declined to 38.7% in 2011 from 40.8% the previous year, which “again is slightly different from last few years, in which the top 20 managers grew faster as a whole,” Mr. Baker said. “Part of that is because there are more passive managers among the top 20 and there's potentially more of an equity bias among them.”
Of the top 20 managers, U.S.-based managers ran 64.2% of the total while European managers had a 32.9% share. Japan-based managers had a 2.8% share. Bank-owned and independent managers remain dominant in total assets among the top 20, followed by insurer-owned managers, according to the survey.
Elsewhere in the top 20, Legg Mason Inc. dropped to No. 23 in 2011 from 18th place the previous year. Meanwhile, Northern Trust Global Investments climbed to No. 19 from 22nd.
For the largest managers, another potential hurdle for growth is that “at some point, clients may look at whether to keep giving money to the largest managers,” Mr. Baker added.
Despite its size, BlackRock is keen to expand in a number of markets internationally such as defined contribution and third-party distribution. As of year-end 2011, about 60% of BlackRock's AUM was managed on behalf of clients in the Americas. Europe, Middle East and Africa made up about 29% of the AUM, while the remainder was sourced from the Asia-Pacific region. “Compared to some domestic players in (continental) Europe, for example, we still have a lot of room to grow,” Mr. Fairbairn said.
“Of course, we can only grow if our beta is efficient and our active strategies outperform,” he added.