The lagging performance of equities in 2018 spelled trouble for several asset managers, according to new data from Willis Towers Watson’s Thinking Ahead Institute.
The data, published October 28, showed that while major managers have performed strongly over the past five years, year-over-year returns weren’t quite as attractive, particularly for managers with a focus on equities.
“Obviously 2018 saw declining markets, especially in equities,” said Bob Collie, head of research for the Thinking Ahead Institute. “The more that a manager was biased to equities and fixed income, the more their assets under management would tend to be down.”
The aggregate assets under management for the top 500 asset managers globally fell by 3 percent year over year, to $91.5 trillion, the data showed.
The biggest losers included South African asset manager STANLIB, whose assets fell 51.9 percent year-over-year; Chinese manager Truvalue Asset Management, whose assets declined 48.1 percent; Boston Private Financial, with a 47.8 percent drop in assets; and India-based Reliance Capital, whose assets fell 45.3 percent, Willis Towers data showed.
A spokesperson for Boston Private said via email that the firm had sold two of its affiliate businesses that year, which accounted for 45 percent of its assets under management as of December 31, 2017.
“Either what has happened is that [the asset managers that struggled] demerged their business, they may just be calculating something differently, or they may have different mandates,” Collie said by phone.
The winners, meanwhile, included Mapfre, a Spanish insurance company that launched an asset management division in 2017 and whose assets surged 441.2 percent last year. Others were Hong Kong-based ICBC Credit Suisse Asset Management, whose assets rose 284.2 percent; Chinese firm CCB Principal Asset Management, with a 230.9 percent increase in assets; Japanese firm Mitsui Fudosan Investment, whose assets rose 189.4 percent; and Chinese firm Penghua Fund Management, whose assets climbed 178 percent.
Collie noted that the data provided to Institutional Investor had some caveats — certain firms may have filled out the WTW forms inconsistently from year to year, for example using different names from one year to another, while others may have changed the way they calculated assets year-over-year.
Collie said the researchers were surprised to see that assets at the top 20 firms, as a proportion of the whole, were down. “The biggest names tend to get proportionally bigger,” he said. “They may have been more exposed to equity markets than the other ones.”
Indeed, the data showed that total assets under management for the top 20 asset managers decreased by 4.8 percent year-over-year, to $38.6 trillion.
What’s more is that the amount of capital invested in passive assets — which has been steadily growing — dropped 3.4 percent year-over-year.
“It was definitely not what we expected,” Collie said. “It’s probably because relatively speaking, passive managers tend to be invested in equities more.”
But year-over-year changes don’t show a full picture. Assets at Nuveen, for instance, have increased 33 percent since 2013 – the largest growth among the top 50 ranked firms. But between 2017 and 2018, the firm’s assets fell 4.1 percent, data from Willis Towers Watson showed.
“We have experienced strong growth in many areas of our business over the last several years as Nuveen has evolved in line with the changing needs of our clients,” said Margo Cook, president of Nuveen Advisory Services, via email.
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Blackstone Group, Vanguard Group, and Legal & General Group have posted a 12 percent increase each in assets under management since 2013. But Legal & General’s assets fell 3.3 percent between 2017 and 2018, while Blackstone’s increased by 8.8 percent and Vanguard’s fell 1.5 percent, the data showed.
“Vanguard’s growth is an outcome of the continued value we deliver to clients and their trust in us, as well as a reflection of the strong returns in capital markets over the last decade,” a spokesperson said via email Monday.
A Blackstone spokesperson pointed to comments made by the firm’s president and COO, Jon Gray, during the company’s October 23 third quarter earnings call.
“We've raised more capital, including faster growth in our perpetual vehicles, successfully launched multiple new business lines in the areas we outlined, and advanced against our financial targets,” Gray said during that call.
An earlier version of this story cited WTW data showing that assets at Edmond de Rothschild Group had declined significantly. A spokesperson contacted II after publication stating that those figures were incorrect. Assets at the firm actually increased by €3 billion ($3.3 billion) from the previous year, according to the spokesperson.