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The industry of asset management
In Germany, the correct banking supervisory term for asset management services pursuant to Sec. 1, Para. 1a No. 3 KWG (German Banking Act) is ‘portfolio management’ (Finanzportfolioverwaltung). In contrast to financial or investment advice, asset management not only provides investment suggestions in the form of an advisory service, but the asset manager makes and carries out investment decisions autonomously.
Owing to their business purpose, asset managers either operate as independent companies or as subsidiaries and divisions of banks and insurance companies. They manage the assets of institutional investors (such as pension funds, insurance companies, banks, foundations, charitable or state institutions) and/or private investors.
Apart from managing assets based on asset management mandates, asset managers especially use investment funds as products, which in turn are subdivided into special funds for exclusively institutional investors and mutual funds for institutional and private investors. The special fund represents a special feature on the German (and Austrian) market, which is accompanied by balance sheet advantages for institutional investors. In other countries, however, institutional mandates are usually managed through segregated accounts.
Current status and trends
Asset managers manage more than EUR 100 trillion globally (2021 figure). The US market is by far the largest, with a share of around 50%, followed by Europe with a share of just over 30%. Asia’s market size, which is currently still quite small, contrasts with a market growth of 12%, which is higher than in Europe.
The asset management industry is characterized by a strong global market concentration. While more than 4,000 companies operate in this sector in Europe alone, the ten largest companies worldwide hold more than 35% of all assets under management.
Probably one of the most popular trends in asset management for several years has been the topic of sustainability. Because of their business model, asset managers are important catalysts for channeling investor cash flows into sustainable investments as financial intermediaries. With an annual growth rate of more than 60%, the global trend towards sustainable investments has gained momentum. Europe, with a market share of approximately 80% in all sustainably managed assets, plays a special role as a sustainability driver. The U.S. and Asia lag far behind Europe at 13% and 4%, respectively, largely due to the ambitious regulatory agenda and related initiatives such as the EU Commission’s SFDR or EU taxonomy. Meanwhile, the share of sustainably managed open-end investment funds (UCITS and AIFs) and ETFs in Europe is 16% and rising.
The European Sustainable Investment Funds Study 2022 as well as our dedicated website (consulting services on ESG integration for asset managers) provide further facts and figures on sustainability among asset managers.
Asset management in Europe
For the European Asset Management Study, zeb identified and analyzed the following companies as being of central importance for the European industry due to their business activities. However, the assets under management shown there include the total assets managed by these companies because most managers do not provide specific country information. In addition, there are other asset managers such as Fidelity, which also have a strong footprint in Europe but whose figures are not available.
Asset management in Germany
The German fund market, whose statistics are maintained and published by the German fund association BVI, offers a relatively good level of transparency. These statistics reveal that the German fund market is the largest in Europe with approximately EUR 3.7 trillion in assets under management in 2021, and is growing at a rate of around 10% p.a.
An asset manager’s growth is measured by its assets under management (AUM). It consists of the performance of the market in which the managed assets are invested and the inflow of net new money (NNM).
Institutional investors hold the largest share of assets under management of approximately 60% in special funds. This market segment is growing at a rate of 10% p.a., thus slightly outpacing the mutual fund segment, which accounts for approximately 40% of the market and grows at a rate of 9% p.a.
A competitor comparison in the German fund market reveals that German asset managers are among the medium-sized to small providers in terms of their global AUM, but dominate the German fund market. The top five German providers account for almost 80% of fund assets.
Fit for the future?
zeb supports local and global asset managers in their strategy, sales, IT and regulatory issues in order to ensure a promising positioning for the future.
Find out more on the dedicated asset management website (in German).
Trends of the European asset management industry
Auch die Gesundheit und Trends der europäischen Asset-Management-Branche untersucht zeb jährlich in mehreren Studien und BankingHub-Artikeln.
zeb also examines the health and trends of the European asset management industry in several studies and BankingHub articles every year.