Asian asset managers lag behind global peers as Japan slows


According to a study by the Thinking Ahead Institute of Willis Towers Watson, asset growth for Asian investment managers has lagged in 2020, due to weak performance in Japan.

Last year, Japanese fund managers saw the smallest increase in assets in all major markets last year at 10.2%, marking a reversal of fortunes after leading the way in 2019 with an increase of 24 , 9%.

Europe moved to the top of the pile, with assets under management up 16.7%, ahead of North America, up 13.3% in a year punctuated by the start of the coronavirus pandemic and the subsequent recovery fueled by economic stimuli.

With Japan accounting for nearly two-thirds (63%) of all Asian assets under management, the fate of the region is largely linked to the performance of the country’s managers and the health of its national economy.

“The Japanese government instituted tax hikes in the fourth quarter of 2019, so the economy was already in a recession because of it when the pandemic shock hit in the first half of 2020,” the Thinking Ahead Institute said, adding that the economic fundamentals in Japan were quite weak.

Over the past decade, Japan has lost the largest market share (-2.5%) to other countries, notably the United States, China and Canada. Over the same period, the United States increased its market share the most globally, from 6.4% to 54%. It is followed by China which increased its market share by 2.4%.

The Chinese market has experienced the fastest growing in the world over the past five years, although its five-year compound annualized growth rate fell from 22.3% in 2019 to 21.1% last year, in dollars.

Jayne Bok, Asia investment manager at Willis Towers Watson, called for an urgent shift in mindset among Asian fund managers if they “are to continue the meteoric rise they have seen in the past,” adding that net-zero mandates should be taken seriously.

“The inclusion of ESG practices in their investments will be critical to the future resilience of their portfolios and will determine whether or not they outperform their global peers in the years to come,” she said.

Save asset under management

Despite the economic turmoil caused by Covid-19, the world’s top 500 fund managers hit a new record high of $ 119.5 billion in combined assets under management, up 14.5% year-on-year.

Although the rise in tech stocks grabbed the headlines, demand for alternative investments, sustainable strategies and private markets also strongly supported growth.

Assets allocated to environmental, social and governance (ESG) mandates jumped 43.8% to a record $ 1.33 billion.

The year also saw an increase in passive investments, as the focus on costs intensified in the low-yield environment, with passive assets under management up 16.2% to 8.34 billion, exceeding the 15.4% growth in active fund assets to $ 23.71 billion.

HNW assets

Assets under management for high net worth clients reached $ 1.98 billion in 2020, based on a subset of 42 fund managers tracked in WTW’s 2020 rankings.

Sumitomo Mitsui Trust Holdings is the leading fund manager for high net worth clients, with $ 951 billion in assets, although it ranks 27th in the annual ranking of the world’s top 500 fund managers, with total assets of $ 1.05 billion.

In contrast, the world’s largest asset manager, Blackrock, managed $ 126 billion for the ultra-rich out of its $ 8.67 billion in assets under management.

Asset managers who manage the most HNWI money

Top 10 managers who manage HNWI in 2020
P & I500 classification Asset manager AUM ($ ‘m)
27 Sumitomo Mitsui Trust Holdings 951,702
15 Morgan stanley 656,100
138 CHA Capital 139,579
1 Black rock 126,242
64 Macquarie Group 13,867
365 Hunt 11 839
193 Hines 10,413
230 Connor, Clark and Lunn Financial 8 689
43 New York Life Investments 8,295
16 Price T. Rowe 5 648

Source: Thinking in the Future Institute

The big ones get bigger

The top 20 managers saw the strongest growth, with market share reaching 44% of total assets, up from 43% the previous year. Their 10-year compound annual growth rate was 7.2%, beating the larger average of 6.3%.

Asset management giants Blackrock and Vanguard retained the top two spots with $ 8.67 billion and $ 7.15 billion respectively, for the seventh consecutive year.

Fidelity Investments toppled State Street Global Advisors to take third place as its assets rose 19% to $ 3.61 billion, just ahead of the latter’s $ 3.46 billion in assets.

Franklin Templeton and Natixis Investment Managers joined for the first time the board of directors of the top 20 leagues, replacing Invesco and Wellington Management.

Franklin Templeton more than doubled its assets to $ 1.5 billion to rank 14th, which analysts attributed to its historic acquisition of Legg Mason. At the same time, Natixis’ total assets reached $ 1.35 billion, up from $ 1.04 billion year-on-year.

Overall, 14 of the top 20 managers are Americans. They represent more than three quarters (78.6%) of total assets under management, with European companies making up the remainder.

Highlighting the upsurge in consolidation, nearly half, or 221, of investment managers have fallen from the world’s top 500 list over the past decade, a trend that analysts say is expected to continue.

The data is based on 208 companies that participated in the survey, which has taken place annually since 2016.

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