The United States powers global growth in asset management, as top-line growth masks an unease with tougher times for industry profitability.
Global assets under management are set to cross US$70.4 trillion by the end of 2013-a full US$20 trillion higher than the industry's low point in 2008. The even better news is that this is a conservative estimate that may need upward revision if the global financial markets continue to perform as strongly in the rest of the year as they have in the first five months, according to Cerulli Associates' flagship international report, The Cerulli Report: Global Markets 2013.
Now in its 12th iteration, this annual report covering both retail and retirement asset management globally reports that non-US assets accounts for a more than 50% share of total assets, but the engine of growth remains the United States, certainly in the near term. "It would be churlish not to feel a sense of optimism about the near- and medium-term outlook for the global asset management industry, especially when considering top-line growth", says Shiv Taneja, Cerulli's London-based managing director. He adds that even Europe has managed to add US$5.9 trillion in assets since 2008.
"The worry, however, is when considering bottom-line growth. Here the picture is less well-defined, as many firms-large and small-continue to have to deal with the effects of the financial crisis and margin pressure. The sunny uplands may beckon, but a good guide is going to be essential," says Yoon Ng, associate director at Cerulli, and one of the report's key authors.
The Global Markets 2013 report shows that only Japan is slated to show slower asset growth than Europe over the next five years to 2017, but when it comes to heft there is no getting away from the fact that the United States is, and is likely to remain, the sweetest spot, from a global growth standpoint. "Could it really get to be more than twice bigger than Europe, in asset terms, by 2017? It certainly appears so," says Taneja.
Cerulli's prognostication suggests that Asia ex-Japan will continue to show the highest growth rate over the five years to 2017, but this top-line figure must be measured up against the region's ability to generate consistently strongly bottom-line growth. The next few years will be crucial, says Ng.
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