Asset management market concentrated in top 20

The world’s top 20 asset managers now control 44% of total assets, as the 500 largest firms recorded a new high of US$119.5 trillion in assets under management, according to new research from the Thinking Ahead Institute.

The research, conducted in conjunction with US investment newspaper Pensions & Investments, confirmed the growing concentration of the asset market share.

As of the end of 2020, the growth in assets managed by the largest 20 firms exceeded the growth rate of the total assets managed by the broader group of 500. From the previous year the top 20 recorded an increase of 17.2% to US$52.6 trillion, while the group increased by 14.5%.

Blackrock retained its position as the top-ranked asset manager followed by Vanguard holding its second-place position for the seventh consecutive year, while Australian manager Macquarie Group ranked 64^th on the list.

Of the top 500 managers, 221 names which featured on the list in 2011 are now absent in 2021, demonstrating a quickening rate of competition, consolidation and rebranding in the investment industry in the past decade.

The Covid-19 pandemic also prompted shifts in asset managers and clients towards investing in sustainability, as the Net Zero Asset Managers Initiative recorded 128 signatories, representing US$43 trillion under management since December 2020.

“We have witnessed unprecedented change within the investment industry – accelerated dramatically by the pandemic,” said Roger Urwin, co-founder of the Thinking Ahead Institute.

“In particular, sustainability is no longer just a luxury for some firms. Instead, during the pandemic, asset managers from all corners of the world have become even more aware of the interconnectedness of the financial system with society and the environment.”

Simon James, Head of Credit at Willis Towers Watson, added that these investment trends are also visible in the Australian market and sustainability is “undoubtedly the top priority for most asset owners”.

The research also revealed a notable shift in the mindsets around diversity and inclusion (D&I) and environmental, social, and governance (ESG), reflecting the abilities of asset managers to develop and innovate.

“We have seen this particularly with ESG mandates, which increased by 40% in 2020,” Urwin said.

“The biggest contributor to this was the growth in ESG ETFs.”

James also said there have been more deliberate efforts to identify asset managers with positive D&I attributes.

“It is encouraging to see half of managers surveyed have increased the proportion of minorities and women in senior positions, though these groups are still significantly underrepresented in absolute terms.”