Top Fund Managers Face Declining Assets and Profits The upheaval in global stock and bond markets is squeezing assets and profit margins at Europe's biggest money managers and is likely to prompt a fresh wave of consolidation, according to executives of the Euro 100, Institutional Investor's exclusive ranking of the region's biggest asset managers.
For an 11th consecutive year, UBS ranks No. 1 in the Euro 100; the bank had €1.92 trillion ($2.83 trillion) in assets under management at the end of 2007. But the bank has announced $42 billion in writedowns on U.S. subprime mortgage securities and other assets over the past year, and those losses have had a reputational impact on asset management, says John Fraser, head of UBS Global Asset Management. UBS's asset management business suffered outflows of Sf41 billion ($40 billion) in the first six months of this year.
"The overall financial crisis combined with the state of the U.S. economy, the speed of the downturn in Western Europe and the emerging downturn in China all make me very wary about the prospects for the asset management industry next year," says Fraser. "There will be far less appetite for risk across the board."
Total assets managed by companies in the Euro 100 fell by 1.74 percent in 2007, to €20.29 trillion. That's the first drop in assets since 2002 and represents a stark reversal of fortune after the recent boom, which saw assets grow by 9.6 percent in 2006 and 21.5 percent in 2005.
How We Compiled the Euro 100 To compile this ranking, Institutional Investor surveyed banks, insurance companies, pension funds, independent fund managers and foreign money management firms with registered offices in Europe. European companies and companies headquartered in Europe (for example, HSBC Global Asset Management) were asked to report global assets under management. Non-European companies were asked to report only European-derived assets (invested domestically or internationally) and non-European assets slated for investment in Europe. Senior Associate Editor Tucker Ewing and Researchers Emily Kaemmerlen and Valentina McKenzie gathered the data from questionnaires completed by the institutions themselves. This information was supported by annual reports, additional reporting and follow-up faxes and telephone calls. The numbers are as comparable as possible, considering the different accounting practices in Europe. Assets are stated in euros. In some cases, assets at continental European institutions are higher than reported because their accounting rules require that they value assets at the lower of cost or market value. As a result of currency conversion and rounding, not all columns add up. All information is as of December 31, 2007, unless otherwise noted.