(Bloomberg) -- Many of the world’s asset managers may need to work harder for their money.

Their profits revisited peak levels in 2014, and AUM rose to a third consecutive record, at $74 trillion. But that growth came largely from rising global asset values. At the same time, a continued shift into lower-cost products, such ETFs, pinched net revenue growth, and the amount of net new assets flowing into the firms barely budged, according to Boston Consulting Group’s global asset management report. 

ETFs have been taking the investment world by storm. In the U.S, they made up 50% of all 2014 fund flows. Investors are benefiting from a rapid race to the bottom in fees as firms fight to gain market share. Retail fees on passive equity products such as index funds and ETFs fell 0.03 percentage point in 2014, following a 0.04-point fall in 2013. That adds up to a 20% drop in two years. Fees on passive fixed-income products, which include more esoteric fixed-income ETFs with generally higher fees, rose by 0.04 of a percentage point. 

The shift away from actively managed equity mutual funds and into passive products kept index-fund giant Vanguard Group at the top of the industry list for biggest net flows in 2014, at $219 billion. Among the firms with positive net flows, Vanguard captured 31% of the total pot of assets. Its closest rivals were BlackRock, at $98 billion; Dimensional Fund Advisors, at $27 billion; and TCW and Dodge & Cox. Both of those firms saw net flows of $26 billion in 2014, and are names that didn’t make it in last year’s top 10.

While the major trend is the move into passive products, almost all of Dodge & Cox's $26 billion gain flowed into two actively managed funds. In 2014, its Income Fund gained about $13 billion in assets in the wake of Bill Gross's departure from Pimco Total Return. Another $11 billion went into its International Stock Fund, which closed to new investors in mid- January when assets reached about $66 billion (they've since grown to $71.5 billion). 

The regional differences in what investment strategies attracted the most investor money were sharp. In the U.S., $104 billion flowed into the “large blend-equity” category, at $104 billion, followed by foreign large-blend equity, at $94 billion, and target date funds, at $49 billion. In Europe, the region’s bonds attracted the most money in 2014, at $128 billion. And in the Asia-Pacific region, risk aversion reigned supreme, with investors plowing $215 billion into money market funds. 

In the U.S., 2014 brought little growth in fund flows. What growth there was in retail flows came mostly from European investors. There, net flows into funds rose as European banks, having shored up their balance sheets with cash to meet regulatory standards, shifted attention from deposit gathering to selling mutual funds. Institutional flows into asset managers were basically flat, as many managed more assets in-house.

Rising asset values didn't lift the profits of all asset managers. About 20% saw profits fall in absolute terms, the report says. If the market takes a big hit, those players — the report doesn't name names — are in for a very rough year. 

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