North American asset managers were hit hard by 2022’s volatility, losing 14.2 percent of their total assets under management in just a year.


WTW, which assesses the state of the asset management industry every year, found that despite this drop in assets, BlackRock, Vanguard, and Fidelity Investments remain the top three asset managers based on size for the third year running.


The decline in assets was primarily spurred by a decline in the global markets, which was driven by inflation and higher interest rates. WTW looks at the 500 largest asset managers annually to determine both size and priorities. The firm released its 2022 numbers on Monday.


“With the removal of tailwind conditions for asset values, the asset management business has had to deal with considerable stress with costs on a natural rise,” according to WTW. “This margin pressure has led to asset managers adopting bigger change profiles in which a focus on private markets, increased personalization, and use of technology are common strategies.”


In North America, total assets under management hit their lowest level since 2019. Non-government retirement plans still accounted for the largest subset of assets under management at these managers, even if the total managed fell by $1.8 trillion.


Japanese investment managers managed to escape some of this decline: their total assets under management fell by just 5.5 percent year-over-year. Asset owners have displayed an increasing interest in investing in Japan, as the country’s central bank has shifted monetary policy and the nation sees higher tourism rates.


European asset managers, meanwhile, experienced a different narrative. The continent’s managers saw a 16.8 percent decline in total assets under management, according to WTW.


“High inflation and interest rates disrupted the markets worldwide, also influenced by heightened geopolitical tensions,” according to WTW. “While macro uncertainty remains high, a common theme was to expect a higher for longer regime in interest rates in which concerns about inflation and growth remain elevated.”


As for growth? Over the past five years, Fidelity International — not to be confused with Fidelity Investments — has grown the fastest, increasing assets under management by 43.7 percent.


Brookfield grew by 22.8 percent during that time period, the second-largest increase. BlackRock, meanwhile, saw an AUM increase of 6.4 percent, while Vanguard’s growth was 8 percent.


When it comes to servicing these clients, asset managers are seeing the biggest spike in interest in sustainable investing, including proxy voting. The increase was 89 percent year-over-year.


According to the survey, 77 percent of managers saw an increase in client interest in deploying technology and big data, and 66 percent were interested in their cybersecurity work.