Institutionally oriented managers are boosting revenue at a faster rate in the retail market than their retail-oriented counterparts as investors and their advisors shift focus to non-traditional investment strategies, according to a Casey, Quirk & Associates report.
Institutional managers increased revenue by 25% in 2013 from the retail channel, compared with an 11% gain for retail-focused managers, according to the analysis, Performance Intelligence: 2014 Survey Results.
In 2012, revenue from the retail channel rose 10% for institutional managers and 7% for their retail counterparts. By contrast, in both 2011 and 2010, retail managers generated more revenue growth for the retail market than institutional managers, according to the analysis.
“The retail channel is driving growth in the global investment management industry,” says Jeffrey Levi, a partner at Casey Quirk. “Recent revenue gains by institutional managers in the retail market offer compelling evidence that strategies favoured by institutions—including non-traditional fixed income, emerging markets debt, and equity, alternatives and multi-asset-class solutions—increasingly are making their way into the portfolios of retail investors.”
Overall, the global investment management industry reached new highs last year for revenue, US$302 billion, and professionally managed assets under management (AUM), US$58 trillion, according to the benchmarking analysis. Operating margins have returned to their pre-financial crisis peak, a median 35%, according to the analysis.
AUM growth was 13.4%, driven by strong capital markets and seven-year high net inflows of 3.2%. However, the growth projections through 2018 in the benchmarking analysis are forecast to be more modest: 1.6% net inflows and 5.6% capital appreciation annualized.
This year’s report surveyed 90 money managers worldwide that invest an aggregate US$25 trillion for institutions and individuals.
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