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Top 400 Asset Managers 2017: A new, improved business?

The cosy old world of asset management seems already seems like a different era. One day, CEOs will probably tell their grandchildren about the bygone days of fat margins, soft dollars and dubious intermediary arrangements. Business school students will be shocked by case studies of high-fee, low-added-value active management.

Just as today’s students might wonder how previous generations got by with slide rules and logarithmic tables, tomorrow’s generation of analysts and aspiring fund managers might ask how you could base a credible security selection model within the limitations of traditional corporate data sets.

In fact, a new paradigm for asset management may soon be upon us, just as enhanced computing power led to the growth of quant and indexing from the 1970s onwards. Big data, machine learning and artificial intelligence (AI) are already challenging old investment models, and firms of all sizes, from BlackRock down, are hiring data scientists to pep up their investment processes. 

This could be a thoroughly good thing. For quant processes it means managers need no longer be dependent on a similar set of algorithms, so episodes like the 2007 quant crash may be a thing of the past. In fundamental strategies, the collision of traditional and big data could lead to a productive synthesis between man and machine. To coin an increasingly popular tech refrain, man and machine are better than man or machine.

Regulators and clients have exercised pressure on asset managers to deliver better value on fees and greater transparency on costs, which has clearly squeezed margins in recent years, as has competition from low-cost passive and smart-beta solutions. New models of active management might relieve some of the margin pressure if they prove their worth, but many owners are looking to consolidate to leverage economies of scale in this new world. 

Top 400 Asset Managers 2017 (Top 25)

Top 400 Asset Managers 2017 (Top 25)
 CompanyCountryTotal AUM 2017Total AUM 2016
   31/12/16 (€m)31/12/15 (€m)
1BlackRockUS/UK4,884,5504,398,439
2Vanguard Asset ManagementUS/UK3,727,4553,091,979
3State Street Global AdvisorsUS/UK2,340,3232,066,479
4Fidelity InvestmentsUS2,129,650 (1)1,830,330
5BNY Mellon Investment Management US/UK1,518,4201,492,895
6J.P. Morgan Asset ManagementUS/UK1,479,1251,361,178
7PIMCOUS/Ger/UK1,406,350 (1)1,321,158
8Capital GroupUS1,401,7801,272,080
9Prudential FinancialUS1,201,0821,089,737
10Goldman Sachs Asset Management Int.US/UK1,116,606996,651
11AmundiFrance1,082,700985,028
12Legal & General Investment Mngt.UK1,047,4701,012,389
13Wellington Management InternationalUS928,380853,274
14Northern Trust Asset ManagementUS/UK893,575805,763
15NuveenUS/UK838,437-
16Natixis Global Asset ManagementFrance/US831,501801,128
17InvescoUS/UK771,233714,070
18T. Rowe PriceUS/UK768,711702,479
19Deutsche Asset ManagementGermany705,867777,091
20AXA Investment ManagersFrance699,628 (2)669,436
21Affiliated Managers GroupUS689,000578,310
22Legg MasonUS685,993618,397
23Franklin Templeton InvestmentsUS/UK684,270703,220
24Sumitomo Mitsui Trust Holdings (SuMi TRUST)Japan659,180614,762
25UBS Asset ManagementSwitzerland/UK612,754597,234

(1) As at 31/03/17 (2) As at 30/09/16

Click here to download the complete Top 400 table

(To buy the Top 400 data, email Emma Morgan-Jones )

Once, insurers and banks looked to acquire asset managers because the business provided high and stable margins. But the wave of consolidation since 2009 has been more about external pressures – shoring up bank capital adequacy ratios or the challenge to traditional mid-size players of passive and factor investing approaches. 

The rise of new technologies is likely to spur more M&A activity. Yet in a world of big data and practical application of AI, agility may be as valuable as scale economies. There are already enough case studies of failed asset management mergers to fill a textbook or two. 

So to make M&A work, business leaders will need to tread carefully to avoid destroying the value built up within existing processes, teams and their cultures. A good client relations culture has long been a winning formula in asset management yet this seems harder to replicate in practice for many players. Diversity within organisations and teams is increasingly in demand.

Preaching a gospel of long-termism isn’t enough though. As the likes of the CFA Institute have long preached, tomorrow’s asset management firms will have to embrace a culture of responsibility towards clients and their desired long-term outcomes if this business is to become a respected profession that transforms investment dollars into long-term productive capital. 

There will always be what Keynes termed the “beauty contest” investors, who chase short-term value, and intermediaries who benefit handsomely from this approach. But the news is that institutional investors, who are getting larger and more sophisticated themselves because of consolidation, are increasingly able to tell them apart. And they know which they prefer.

Liam Kennedy, Editor, IPE

 

Our methodology: In New York’s Gilded Age at the end of the nineteenth century, just 400 people were counted among the members of fashionable society – reputedly the number who could fit into Mrs Astor’s ballroom. In this spirit, since 2002, IPE has collected data on the leading 400 asset managers both globally and in Europe. The data is compiled by IPE, on the most part based on information provided by the individual companies and in a few cases based on information from public sources.

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