For the year ended Dec. 31, the three largest managers of U.S. institutional tax-exempt assets managed internally were BlackRock, Vanguard and State Street Global Advisors, retaining their positions over the previous year.
BlackRock remained in the top spot with $1.93 trillion in assets in this universe, growing 36.4%, followed by Vanguard, which had $1.6 trillion at the end of the year, up 32.2%; and State Street, which grew 18.3% during the year, breaking the $1 trillion mark. As of Dec. 31, the firm had $1.01 trillion in assets in the universe, compared to $857.7 billion a year earlier.
While Casey Quirk expects passive players to claim more assets this year as investors focus on low-fee strategies, some sources have said certain active managers may have the opportunity to shine this year, too, given the focus on active stock selection in volatile markets.
Charlie Ruffel, managing partner and chairman at Kudu Investment Management LLC, a New York-based capital provider for asset and wealth management firms, said 2020 is "going to be a good time for active boutiques that can demonstrate that they can add performance," and that "money will flow to a lot of managers" that outperform.
"It's been a long time since active managers could demonstrate their value among their peers and vs. passive managers," he continued.
Mr. Ruffel added that he "wouldn't bet against all of the big players" such as BlackRock, Vanguard and State Street — and even some larger alternatives firms.
"I think they will continue to grow. But I think you'll find this will be a good time for boutiques as well," he said. "There are a lot of people who believe a lot of the managers in the middle will struggle. I think if the managers in the middle have done well in this environment, they can really demonstrate why you should be giving them assets. But for the ones who haven't, this is a bit of an existential threat," Mr. Ruffel said.
Luba Nikulina, global head of research at Willis Towers Watson PLC in London, said the coronavirus crisis and resulting fallout in the markets will just exacerbate and accelerate longer-term trends facing money managers.
Larger diversified firms and some niche active managers may be able to compete, but "it will become even harder for midsize managers to continue to be successful," Ms. Nikulina said.
Most managers falling in the middle of the pack, by worldwide institutional AUM, lagged the asset growth seen among the largest money management firms, P&I's survey found. Of the 11 money managers with at least $1 trillion in worldwide institutional AUM, five saw their AUM rise 22% or more over the year ended Dec. 31. Only 11 of the next 50 largest managers matched that growth, with a couple benefiting from acquisitions during the year.
Furthermore, the extreme volatility in the markets has been hard for active managers to handle.
"Here, we have massive volatility, but when we speak to active managers now, it's really hard because at the moment there is so much uncertainty with all of these factors that are beyond financial forecasts," Ms. Nikulina said.
"Actions by governments and central banks are just unprecedented ... You cannot rely on the past. When we drew forecasts, we would usually draw from the past. I'm pretty sure it will result in opportunities for some active managers. But you really need to be very smart to navigate," she said.