At the end of 2012, the figure stood at $63.9trn, according to the 'Big Four' consultancy’s report, Asset Management 2020: A brave new world.
Representing a compound annual growth rate of nearly 6%, the report revealed that, perhaps unsurprisingly, South America, Asia, Africa and Middle East economies were set to grow faster than in the developed world leading up to 2020, creating new pools of assets that it believed could be harnessed by the asset management world. But it said the majority would still be concentrated in the US and UK.
In Europe, PwC predicted that AUM in Europe will rise to $27.9trn by 2020, from a total of $19.7trn at the end of 2012, representing a CAGR of 4.4%.
The report predicted $101.7trn would be driven by pension funds, high-net-worth individuals and sovereign wealth funds.
At client level, it suggested three key trends were behind the forecasts: the increase of mass affluent and HNW individuals in South America, Asia, Africa and Middle East; the expansion and emergence of new sovereign wealth funds with diverse agendas and investment goals; and the increasing defined contribution schemes partly, driven by government-incentivised or government-mandated shift to individual retirement plans.
Strong branding and investor trust needed
In 2012, the asset management industry was responsible for 36.5% of assets held by pension funds, SWFs, insurance companies and mass affluent or HNW clients. PwC believed this figure could rise a further 10%, representing $130trn in global AUM.
Rob Mellor, asset management 2020 leader at PwC said: “Amid unprecedented economic turmoil and regulatory change, most asset managers have not had time to bring the future into focus. But the industry stands on the precipice of a number of fundamental shifts that will shape the future of the asset management industry.
“Strong branding and investor trust in 2020 will only be achieved by those firms that avoid making mistakes that attract the ire of investors, regulators and policymakers. Asset managers must deliver the clear message that they deliver a positive social impact to investors and policymakers. The efforts required to satisfy investors and policymakers cannot be left to others.
“The coming years will bring the industry higher volumes of assets than ever before which places more responsibility on firms to manage these assets to the best of their collective ability. Asset managers must clearly outline the value they bring to customers while being fully transparent over fees and costs.”