International asset management firms are taking their recent uptick with a grain of salt as they anticipate a continued climb from the financial pitfalls of 2008, a new study claims.
In a report issued by The Boston Consulting Group (BCG) yesterday, the global advisory firm said money management firms have seen professionally managed assets grow by 12% to $52.6 trillion in 2009, but still are likely to “face an uphill battle to succeed in [the] post-crisis era.”
According to the eighth annual study titled “In Search of Stable Growth: Global Asset Management 2010,” the jump from the negative 17% posting in 2008 was seen across the globe. For instance, in North America, assets rose by 11%, in Europe they jumped 12%, and both Japan and Australia increased by nearly 7%. Alternately, the rest of Asia posted a 25% increase.
Furthermore, despite this gain in assets under management (AUM), “average AUM and the economics of asset managers deteriorated for the second consecutive year.” Findings indicate that average AUM fell by 4% and net revenues dipped by 11% last year.
The eighth annual report also explained that less than 20% of the surveyed firms failed to raise their profitability. “A higher share of lower-margin products, pressure on prices and structural cost increases will make it difficult to regain peak historical profitability levels in the future,” said Kai Kramer, a BCG partner and leader of the firm’s global asset management practice.
In the near future, expectant hurdles for money management firms include requirements of improved risk management, transparency and overall service. Additionally, passively managed products are now growing more in frequency than active vehicles, the nearly 50-year old firm said.
Even with these daunting numbers, managers continue to be optimistic and anticipate a rebound of nearly 35% in net revenues. Additionally, emerging markets are expected to represent roughly 25% of net sales between 2010 and 2014 for the mangers, the release stated.
Furthermore, BCG recommended that all asset managers “focus on what they do best given their particular strengths and weaknesses.” The firm explained that cost management will continue to be “critical”, but stated that growth possibilities are present in “expanding abroad, developing new partnerships and enhancing offerings through M&A,” the statement said.