The global asset management industry has recorded its strongest year of recovery since the financial crisis.
A Boston Consulting Group (BCG) report, Global Asset Management 2014: Steering the Course to Growth, finds that assets under management worldwide recorded a second consecutive year of solid growth, rising to a record US$68.7 trillion ($73.8 trillion) last year from US$60.9 trillion in 2012.
Industry profits in absolute terms surged to US$93 billion, a 17% rise from US$79 billion the year before.
“Asset management continues to rank among the most profitable industries, with operating margins close to their pre-crisis heights,” says Gary Shub, a BCG partner and co-author of the report.
Operating margins, or profit as a percentage of net revenues, grew from 37% in 2012 to 39% in 2013, compared with a high of 41% before the crisis.
Asset growth continues to be largely the result of rising equity markets, rather than new asset flows, the report notes.
Net new flows of 1.6% of prior-year assets under management—although the strongest since the crisis—remain a modest part of total growth, and most of those flows go to specialties, solutions and non-traditional asset classes.
In most developed markets, net flows ranged from 1% to 2%. However, they reached 3% to 5% in Japan, Canada and the Nordic countries—and even higher in Italy and Spain, driven by revived retail interest. At the same time, net flows were negative in Benelux and France.
In developing markets—including Latin America, Eastern Europe and Asia, and excluding Japan and Australia—net flows represented 4%. In the Middle East, net flows reached 8%.