Total assets under management of the top 500 money managers broke through pre-crisis levels with a combined $76.5 trillion for calendar year 2013, according to the Pensions & Investments/Towers Watson World 500 ranking of money managers.
The assets rose 14% from the 2012 figures. This is the highest the assets have been since the end of 2007, when total assets under management peaked at $69.4 trillion.
“It is a very significant event that (total assets under management) is now past the pre-crisis level,” said Luba Nikulina, London-based global head of manager research at Towers Watson & Co. “I'm not entirely surprised considering how valuations were growing in 2013, and pretty much across all asset classes. It was to be expected that it would break the previous 2007 record.”
Performance in developed equity markets supported that observation. The Russell 3000 index gained 33.6% for the year ended Dec. 31, 2013, more than double the 16.4% return for the year previous. The MSCI All-Country World index returned 27.5% in the year, up from 2012's 16.1%. Bonds, however, took a bit of a battering, with the Barclays Capital Global Aggregate Bond index returning -2.6% vs. 4.3% in 2012.
Strong performance of U.S. stocks helped to ensure U.S. and Canadian managers continued to dominate the rankings, with a 55% share, or $41.9 trillion, at year-end 2013. That was an increase of 2.4 percentage points compared with figures in the 2012 report. U.S. managers accounted for 50.7% of the total, the largest proportion by country, and an increase of two percentage points compared with 2012.
“There are a number of reasons behind the U.S. standing head and shoulders above other regions and continuing on the growth trend,” said Ms. Nikulina. “The U.S. economy is in comparatively good shape, and the fundamentals there are relatively strong.”
Another factor, she said, is the trend of consolidation in the past few years, with larger managers buying up smaller players or management units of banks and insurers.
“Consolidation is happening in the asset management industry — especially driven by the changes in the banking regulation and insurance company regulation. We have seen a number of transactions where larger managers were buying units of banks and insurance companies,” said Ms. Nikulina.
“A number of significant players with long track records and large businesses of assets under management will be domiciled in the U.S. — and they are the ones that drive this consolidation and are able to have the scale and capital to acquire smaller players. That adds to the U.S. (total).”
European managers also gained ground, with their total share increasing to $26.3 trillion or 34.6%. The total increased by 9.6% compared with 2012. Japanese managers ended 2013 with $4.6 trillion, a decrease of 5.5% in the year. But there might be a simple explanation: the yen depreciated 17.52% against the dollar in 2013.
“Currency plays can make a significant difference (to converted figures) when there is volatility in the exchange markets,” said Ms. Nikulina.