Mr. Kwek said a "cleaning of house in the industry" may be on the minds of asset managers, bringing back discipline and scalability. "Do we need to do more than just belt-tightening?" Mr. Kwek asked.
The "great reset" to which the paper refers has come after another record-setting year for the global asset management industry.
The paper noted that global assets under management as of year-end 2021 reached an all-time high of $126 trillion (a 9.9% increase from $114.7 trillion at the end of 2020), due both to extraordinary market performance and strong net new flows from clients.
The paper said for the first half of 2022, about 35% of fund managers were able to build on the positive net flows for the previous year. This population consisted of large, diversified firms with a breadth of offerings able to meet client needs, passive managers that gained assets from rebalancing and repositioning trades, and firms with proprietary distribution channels.
Despite the challenges of 2022, the paper also noted that the trends that have dominated the last decade look set to continue. Mr. Kwek cited the growth of passive assets, exchange-traded funds and private markets as sea changes that seem set to continue.
"2021 was the single largest growth year in history for ETFs, and this year it looks like it's going to be the second largest year," Mr. Kwek said. "2021 was absolutely the high-water mark for private markets. Fundraising (this year) is down $100 billion but it's still clocking in at $700 billion. The persistence of those trends is quite interesting."