It could take as long as five years for asset managers around the world to recoup the $10 trillion they lost in 2008, according to a report by Cerulli, which calls the global meltdown “of near-biblical proportions.”
It took the industry three years to generate than $10 trillion between 2005 and 2008, and only six months to lose it all, with the bulk of the losses in the fourth quarter, the Cerulli Quantitative Update: Global Markets 2009 report says.
Over the next five years, Cerulli expects growth in assets under management to average 5.5%, reaching $56 trillion by the end of 2013. Cerulli lowered this projection from a projected 7.9% growth at the end of last year. If the 5.5% rate is realized, assets in five years will be only marginally higher than the $53 trillion that the world’s asset managers oversaw at the end of 2007.
“As with all these things, there is a real danger of getting too bearish in one’s sentiment, but it wouldn’t be out of place to suggest that several of the old shibboleths of the asset management industry have been washed away,” said Shiv Taneja, managing director at Cerulli. “The industry’s trust with the retail segment of the marketplace has been severely dented, if not broken. While institutions have tended to be less hasty in voting with their feet, asset managers can expect a much tougher ride than before.”
Going forward, investors are going to measure asset managers by three key criteria: risk management, performance and fees.