The total assets under management (AUM) of the world’s 500 largest investment managers fell by 13.7 per cent year-on-year between 2021 and 2022, according to research by the Thinking Ahead Institute (TAI).

As reported by our sister publication Pensions Age, the TAI noted that the asset reduction, from USD 131.7trn at the end of 2021 to USD 113.7trn at the end of 2022, was the first significant fall in assets managed since the 2008 financial crisis.

Its research highlighted regional differences, with Japanese managers within the top 500 faring better than average, with a 5.5 per cent decrease in assets.

By comparison, North American asset managers saw a 14.2 per cent fall in assets and Europe experienced an above-average 16.8 per cent reduction.

There was a continued evolution in active versus passive assets under management, with passively managed funds accounting for 34.7 per cent of the total, up by 4 percentage points, leaving the remaining 65.3 per cent as actively managed funds.

Among asset classes, the decline in equity and bond markets caused a ‘gentle shift’ in weightings, with alternative investments rising to 7.1 per cent of assets managed.

The combined equity and fixed income allocation decreased by 2.4 percentage points following a stable 79 per cent to 80 per cent share over the previous 10 years.

The TAI noted that, as it is hard for very large managers to have an above average exposure to less liquid asset classes, the top 20 managers were disproportionately hit by the mainstream market falls.

The top 20 managers’ share of the total assets fell from 45.2 per cent to 44.2 per cent over the year, with their total AUM decreasing to USD 50.3trn.

BlackRock remained the world’s largest asset manager, despite a drop in AUM from just over USD 10trn to just over USD 8trn in 2022.

“Throughout 2022, amidst significant turbulence, high inflation and interest rates, and geopolitical tension, investors have faced losses that effectively erased most of the gains achieved during the record-breaking 2021,” commented TAI director, Jessica Gao.

“As we have conducted this research, a common theme throughout our conversations with managers has been to expect a higher-for-longer regime in interest rates in which concerns about inflation and growth remain elevated, suggesting investment managers are not out of the woods yet.

“The need to consider sustainability issues and adapt to systemic risk means forward thinking and robust investment processes that are able to model and measure risks like never before.

“Looking ahead, this awareness of system-level risks could offer support to the investment world as it grapples with the generational challenge of climate change impacts and other sustainability issues.”

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