Asset Management Market Definition
The asset management market consists of sales of asset management services by entities (organizations, sole traders and partnerships) that develop, operate, maintain, and sell assets in a cost-effective manner.
Asset management companies (AMC) are the companies that pool funds from clients, and invest the capital in several financial products such as stocks, bonds, mutual funds, index funds, and hedge funds among others, with the aim of maximizing returns. Asset management companies make investment decisions considering several factors such as client’s risk and investment preferences, tax needs, liquidity needs, and moral and ethical beliefs. Clients of asset management companies include the general public, corporations, government and non-government institutions whose assets are managed by these companies.
Asset management companies provide investors with diverse investing options. A large customer base allows these companies to leverage economies of scale, with the ability to distribute the associating expenses of investment, such as stock purchases, between clients.
Asset Management Market Size
The global asset management market reached a value of nearly $656.9 billion in 2019, having increased at a compound annual growth rate (CAGR) of 6.5% since 2015. The market is expected to decline from $656.9 billion in 2019 to $598.9 billion in 2020 at a rate of -8.8%. The decline is mainly due to lockdown and social distancing norms imposed by various countries and economic slowdown across countries owing to the COVID-19 outbreak and the measures to contain it. The market is then expected to recover and grow at a CAGR of 9.6% from 2021 ad reach $788.8 billion in 2023.
Growth in the historic period resulted from rise in the number of high net worth individuals, digitization, and economic growth. Factors that negatively affected growth in the historic period were volatile market conditions, rising cyber risk, and stringent regulations.
Going forward, increasing retiree population, increasing wealth of high net worth individuals, rising demand for alternative investments, and rising ETFs will drive the growth. Factor that could hinder the growth of the asset management market in the future include rising demand for services provided by Fintech firms and COVID-19.
Asset Management Market Drivers
The key drivers of the asset management market include:
Rising Demand For Alternative Investments – Going forward, increasing demand for alternative investments is expected to drive the market for asset management. There has been an increasing preference for alternative investments among the high net worth individuals and ultra-high net worth individuals. Alternative investments are financial assets, which do not fall into the category of conventional financial assets, such as stocks, bonds, and cash. Examples of alternative investments include hedge funds, private equity, commodities, mineral rights, real estate investment trusts (REITs), art and antiquities, intellectual property, and derivatives (futures, options, and swaps), among others. Investors are increasingly becoming interested in alternative investments owing to several benefits offered such as diversification, reduction in portfolio risk, availability in private markets, low correlation with other assets, less regulation, and relatively higher returns. For example, infrastructure assets are expected to increase from $0.8 trillion in 2017 to $3.4 trillion by 2025. Private equity is expected to increase from $5.3 trillion in 2017 to $10.2 trillion in 2025. Investors are increasingly seeking asset management services to invest in alternative assets. This will drive the market for asset management in the forecast period.
Asset Management Market Restraints
The key restraints on the asset management market include:
Fintech Firms– Going forward, rising demand for services provided by Fintech firms is expected to limit the market for asset management. Fintech firms use technology and innovation to provide financial services through internet-based platforms. Companies in this market provide end-to-end process financial services and solutions to automate financial processes over the Internet. FinTech companies cover various services, ranging from those offering more traditional banking services such as payment services and fund transfers, to those that are technologically focused offering services that enhance the processes in the major financial markets. There has been an increasing demand for Fintech services owing to factors such as increased technological focus. The Fintech market is expected to grow at a CAGR of 9.2% to nearly $158,014.3 million during 2019-2023. Growth of Fintech services might in turn limit the growth of the market for human based asset management services, thereby restraining the market for asset management services.
Asset Management Market Trends
Major trends influencing the asset management market include:
Asset Management Companies Investing In Big Data Analytics
Several asset management companies are investing in big data analytics capabilities to generate insights around clients. Big data solutions are being implemented to deliver insights around client segments, product penetration and analyze training program effectiveness. Asset management companies are exploring applications for big data analytics that go beyond investment management. Sales and marketing teams are looking to examine investor and distribution information to improve customer acquisition, retention and conversion; reduce redemption and improve capital raising. In 2017, there were almost 14,000 research publications in the asset management industry that contained big data or analytics as keywords. Asset management companies such as BlackRock have been increasingly investing in big data analytics technology, to provide their clients interesting investment insights.
Companies Providing Climate Change Expertise
Asset management companies are increasingly providing climate change expertise and are integrating it in their investment process. Physical assets such as buildings, offshore structures and transportation systems operate in a dynamic environment where they are exposed to short, medium and long-term variability in ambient environmental conditions. Thus climate change plays an important variable in determining the durability of these assets. While the consequences of climate change may not be fully felt for decades to come, the impact on society, the economy and regulation will create huge value shift in the market much sooner. Thus asset management companies looking to capitalize on these value shifts are explicitly incorporating climate science expertise into their investment decision-making processes. Companies such as Mott MacDonald have already included climate change expertise in their product portfolio.
Opportunities And Recommendations In The Asset Management Market
Opportunities – The top opportunities in the asset management market segmented by type will arise in the fixed income market segment, which will gain $73,6 billion of global annual sales by 2023. The top opportunities in the asset management market segmented by service element will arise in the asset servicing segment, which will gain $117.1 billion of global annual sales by 2023. The asset management market size will gain the most in the USA at $45.0 billion.
Recommendations – To take advantage of these opportunities, The Business Research Company recommends market-trend-based strategies for the asset management market include consider investing in big data solutions to improve client acquisition and clients’ retention rates, providing climate change expertise in product portfolio to provide product differentiation and attract new clients, deploying more AI applications for faster customer response, and focusing on personalization of services for differentiation against competitors. Player-adopted strategies in the market research services market include expansion through partnerships and collaborations, improving customer services and acquiring businesses to expand business operations and strengthen their service offerings.
Asset Management Market Segmentation
The asset management market is segmented by type of asset class, by service element, by type of client, and by geography.
By Type of Asset Class -
The asset management market can be segmented by type of asset class into - a) Equity
- b) Fixed Income
- c) Alternative Assets and Others
The fixed income market was the largest segment of the asset management market segmented by type, accounting for 67.2% of the total in 2019. Going forward, the alternative assets and others segment is expected to be the fastest growing segment in the asset management market, at a CAGR of 8.6% during 2019-2023.
By Type Service Element -
The asset management market can be segmented by type of service element into - a) Asset Services
- b) Custody Services
The asset servicing market was the largest segment of the asset management market segmented by service element, accounting for 93.2% of the total in 2019. Going forward, the custody services segment is expected to be the fastest growing segment in the asset management market, at a CAGR of 7.4% during 2019-2023.
By Type Client -
The asset management market can be segmented by type of client into - a) Mass Affulent
- b) HNWI
- c) Pension Funds
- d) Insurance Companies
- e) Sovereign Wealth Funds (SWF)
The mass affluent market was the largest segment of the asset management market segmented by end-user, accounting for 36.1% of the total in 2019.
By Geography-
The asset management market is segmented into - o North America
- o Western Europe
- UK
- Germany
- France
- Spain
- Italy
- Denmark
- Switzerland
- Ireland
- Sweden
- Netherlands
- Austria
- Belgium
- Portugal
- Norway
- Finland
- o Asia Pacific
- China
- Japan
- India
- Australia
- Philippines
- Vietnam
- Indonesia
- Malaysia
- New Zealand
- Hong Kong
- Singapore
- South Korea
- Thailand
- o Eastern Europe
- Poland
- Russia
- Romania
- Czech Republic
- o South America
- Peru
- Argentina
- Chile
- Brazil
- Colombia
- Venezuela
- o Middle East
- Saudi Arabia
- UAE
- Turkey
- Israel
- o Africa
- Nigeria
- Egypt
- South Africa
North America was the largest region in the global asset management market, accounting for 51.8% of the total in 2019. It was followed by Western Europe, Asia Pacific, and then the other regions. Going forward, the fastest-growing regions in the asset management market will be Africa and Western Europe.
Asset Management Competitive Landscape
Major Competitors are:
- • JP Morgan Stanley
- • Morgan Chase & Co.
- • Bank of America Corporation
- • Wells Fargo & Company
- • The Goldman Sachs Group, Inc.
Other Competitors Include:
- • UBS Group AG
- • Credit Suisse Group AG
- • HSBC Holdings plc
- • Julius Baer Group Ltd.
- • BNP Paribas S.A.
- • ICICI Prudential Mutual Fund
- • HDFC Mutual Fund
- • Aditya Birla Sun Life Mutual Fund
- • Nippon India Mutual Fund
- • SBI Mutual Fund
- • L&T Mutual Fund
- • Kotak Mahindra Mutual Fund
- • Axis Mutual Fund
- • IDFC Mutual Fund
- • CITIC Securities
- • Fosun International Limited
- • China Huarong Asset Management Company Limited
- • China Cinda Asset Management Company Limited
- • CNPC Capital Company Limited
- • Bosera Asset Management
- • China Southern Asset Management
- • Harvest Fund Management
- • China Merchants Fund Management
- • Nomura Asset Management
- • Sumitomo Mitsui Trust Asset Management
- • Bayview Asset Management (BVAM)
- • Macquarie
- • Mirae Asset
- • Hanwha Asset Management
- • Legal & General Investment Management
- • Insight Investment
- • Royal London Asset Management (RLAM)
- • Baillie Gifford
- • Janus Henderson
- • Aviva Investors
- • Schroders plc
- • Standard Life Aberdeen
- • Prudential plc
- • Amundi Asset Management
- • AXA Investment Managers
- • Natixis Investment Managers
- • Allianz Group
- • DWS Group GmbH & Co. KGaA (DWS)
- • Arca Fondi SGR
- • Generali
- • CaixaBank Asset Management
- • Sberbank Asset Management
- • TKB Investment Partners (JSC)
- • Alfa Capital
- • RSHB Asset Management
- • UFG Asset Management
- • PZU Group
- • Ipopema
- • BT Asset Management SAI
- • BlackRock
- • Vanaguard
- • State Street Global Advisors
- • Fidelity Investments
- • Bank Of New York Mellon
- • PIMCO
- • Manulife Investment Management
- • TD Asset Management
- • Brookfield
- • RBC Global Asset Management
- • BMO Global Asset Management
- • Cedro Capital
- • Constellation Asset Management
- • Brasil Capital
- • BTG Pactual
- • Azimut Holding SPA
- • IP Capital Partners
- • Macro Group
- • Ameris Capital
- • Moneda Asset Management
- • Alantra
- • Delta Asset Management
- • Alkhabeer Capital
- • NCB Capital
- • Sedco Capital
- • Alinma Investment
- • Al Rajhi Capital
- • Riyad Capital
- • Ithraa Capital
- • Centaur Asset Management Ltd
- • Vision Investment Services Co
- • Ubhar Capital Saoc
- • Sanlam
- • Stanlib
- • Ninety One (formerly Investec Asset Management)
- • ABSA Asset Management
- • Coronation Fund Managers
- • Peregrine Holdings LTD
- • UAP Financial Services
- • Investment One Financial Services Limited
- • Vetiva Capital Management Limited
- • CI Capital Asset Management