It’s no secret that Asian asset management is in hyper-growth mode. For the past ten years, assets under management (AUM) have grown by 9 percent annually, capped by a strong 11 percent figure in 2017. Buoyant capital markets, a shift from deposits to investment solutions, and conducive regulatory regimes have propelled growth across Asia. Double-digit growth attracts attention, and both home-grown and foreign managers are enticed by the prospects. Some firms are moving quickly to capitalize, while others seek to defend their turf.
Barring an unforeseen catastrophe, the good news should continue. We expect that the 2017 revenue pool of $66 billion will almost double to $112 billion over the next five years (excluding alternative assets). But the opportunities are by no means evenly distributed. Where can managers hope for the greatest gains? What are the obstacles they must overcome? And what needs to be on the agenda for managers to gain an outsized share of the growth on offer?
We interviewed 25 CEOs and CIOs at 22 of Asia’s leading asset managers, probing their views on the market, its prospects, and the management approaches that are working well today. We supplemented these insights with our decades of experience as well as the most recent findings from Performance Lens, our asset-management research solution. Its key database, the Global Growth Cube, comprises 99 percent of global AUM, and offers highly detailed market sizing for more than 40 countries by client segment and asset class. Additionally, we drew on the 2018 edition of our proprietary Global Asset Management Benchmarking Survey, which covers 60 percent of global AUM. Thirty-five Asian firms, or Asian divisions of multinational firms, participated in the global survey this year. Lastly, 15 firms participated in a survey of asset managers in India.
In this report, we begin with a review of the state of the industry, highlighting the secular trends that have produced strong growth momentum. We then look at the three greatest growth opportunities in the next five years, through 2022: the expanding China market, the institutional retirement boom in developed markets, and the “new wealth horizon” play to capture burgeoning wealth in developing markets. We conclude with insights about the management approach that the fastest-growing firms have used in recent years, and discuss how those techniques and some new variations can help firms put their growth agenda in motion.
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