The assets of the world’s largest 500 fund managers have fallen for the first time in five years as investment houses continue to grapple with outflows from some of their biggest clients.

Total assets fell by $1.4tn to $76.7tn — the first decline in funds under management since 2011, with European investment houses experiencing the biggest falls.

The decrease comes after sovereign wealth funds pulled $46.5bn from investment managers in 2015 to support their oil-dependent economies, far greater redemptions than those recorded at the height of the financial crisis.

Luba Nikulina, global head of manager research at Willis Towers Watson, which put together the research with Pensions & Investments, the publication, said: “The decline in global assets demonstrates the impact of the challenging investment landscape and currency fluctuations on asset managers across the globe.

“The economic slowdown has impacted investment performance. At the same time, asset owners [pension funds and sovereign wealth funds] are rethinking their business models by internalising asset management capabilities.”

Last week Calstrs, the third-largest US pension scheme, said it intended to pull around $20bn from its external fund managers. Jack Ehnes, the chief executive of Calstrs, told FTfm the scheme will reduce the level of money run by external companies to 40 per cent because it “costs pennies” to run the money internally versus paying fees to external investment managers.

“For every $10 we pay an outside manager, we would pay $1 inside. That is a pretty daunting ratio,” he said.

Ms Nikulina said: “This trend will continue to put pressure on revenues and require asset managers to further adapt to this challenging and continuously changing environment.”

The world’s largest money managers*
Rank Manager Country Total assets
1 BlackRock US $4,645,412
2 Vanguard US $3,398,795
3 State Street Global US $2,244,816
4 Fidelity Investments US

$2,035,658

5 Allianz Germany $1,926,034
6 JPMorgan Chase US

$1,722,503

7 Bank of New York Mellon US $1,624,654
8 AXA France $1,489,132
9 Capital Group US $1,390,432
10 Goldman Sachs US $1,252,000
11

Deutsche Bank

Germany $1,217,090
12 BNP Paribas France $1,195,853
13 Prudential Financial US $1,183,673
14 UBS Switzerland

$1,149,668

15 Legal & General Group UK $1,106,077
16 Amundi France $985,028
17 Wellington Mgmt. US

$926,918

18 HSBC Holdings UK $896,000
19 Wells Fargo US $890,300
20 Northern Trust Asset Mgmt. US $875,300
* Ranked by total assets under management, in US millions, as of Dec 31 2015
Source: P&I/Willis Towers Watson World 500

According to the research, the assets held by US fund managers fell 1.1 per cent to $44tn in the year to the end of 2015, while assets managed by European managers fell by 3.3 per cent to $25.1tn.

Although the top 20 managers experienced a 1 per cent decrease in assets from $32.5tn to $32.1tn, their share of total assets increased from 41.6 per cent to 41.9 per cent.

David McCann, an analyst at Numis, the brokers, said: “It has been a tough last few years [for asset managers] and unfortunately this is set to continue.”

He added that the muted organic growth in the fund industry over the past 18 months had put pressure on asset managers’ profit margins.

“Operating margins are pretty much as good as they are going to get,” Mr McCann said. “[This lack of growth] will be a catalyst for more industry consolidation, as management look to offset weak organic earnings outlook with an acquisition.”



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