For the first time in a decade, midsize managers are beginning to feel the squeeze, the Pensions & Investments/Towers Watson World 500 ranking of money managers shows.
“The trend we have observed ... (is in) the proportion of assets held by the larger managers, middle-sized managers, and small firms,” said Luba Nikulina, London-based global head of manager research at Towers Watson & Co.
Assets managed by the world's 500 largest money managers increased 2.1% to $78.1 trillion in the year ended Dec. 31.
The data show the 20 largest money managers in the ranking saw the proportion of assets they manage grow, to account for 41.6% of the total, up from 41% a year previous. Those in spots 21 to 50 also took a bigger share, up to 22.9% at Dec. 31, from 22.2% in 2013.
At the other end of the scale, the managers occupying places 251 to 500 accounted for 6% of the total assets under management. That compared with 5.7% a year previous.
However, the money managers taking up spots 51 to 250 held a 29.5% share of the total assets under management, compared with 31.1% a year previous. That marks the first time these midsize managers accounted for a less-than 30% share of the total assets under management in the past 10 years.
“We can see the reasons why this is happening: At the larger end, we have trends such as the growth of passive (management) — we have been observing it for a few years and it still continues,” Ms. Nikulina said. She said that most of the capital allocated to passive strategies will be awarded to a larger firm with the infrastructure necessary to manage passive strategies on a large scale.