Representing a compound annual growth rate (CAGR) of nearly 6%, Asset Management 2020: A Brave New World forecasts that AUM will grow faster in South America, Asia, Africa and the Middle East than in the developed world, creating new pools of assets that can be harnessed by asset managers.
Nevertheless, the bulk of assets will remained concentrated in the US and UK. In Europe, PwC predicts AUM will rise to $27.9trn by 2020, from $19.7trn in 2012, representing a CAGR of 4.4%.
At the client level, three key trends are behind the forecasts: the increase of mass affluent and high-net worth (HNW) individuals in South America, Asia, Africa and Middle East; the expansion and emergence of new sovereign wealth funds (SWFs) with diverse agendas and investment goals; and the growth of defined contribution schemes.
In 2012, the asset management industry was responsible for 36.5% of assets held by pension funds, SWFs, insurance companies and mass-affluent or HNW clients. PwC says this figure could rise a further 10 percentage points, representing $130trn in global AUM.
‘Clear message’ is key
Rob Mellor, asset management 2020 leader at PwC, wrote: “Amid unprecedented economic turmoil and regulatory change, most asset managers have not had time to bring the future into focus. But the industry stands on the precipice of a number of fundamental shifts that will shape the future of [asset management].
“Strong branding and investor trust in 2020 will only be achieved by those firms that avoid making mistakes that attract the ire of investors, regulators and policymakers. Asset managers must deliver the clear message that they deliver a positive social impact to investors and policymakers. The efforts required to satisfy investors and policymakers cannot be left to others.
“The coming years will bring the industry higher volumes of assets than ever before which places more responsibility on firms to manage these assets to the best of their collective ability. Asset managers must clearly outline the value they bring to customers while being fully transparent over fees and costs.”
Asset Management 2020: A Brave New World can be downloaded from the PwC website, here.