Global Markets 2013 : Trillion Dollar Asset Managers Rule the World : Cerulli

The world’s 50 largest asset managers accounted for more than $38 trillion in assets under management at the end of 2012, $4 trillion more than the year before, as the biggest firms in the industry continued to get even bigger, says a Cerulli Associates report released Wednesday.

Eleven money managers have assets over $1 trillion versus nine a year ago, and twice as many firms have more than $2 trillion in assets, at four versus two, Cerulli reported.

The world’s largest money manager, BlackRock, is still the only global asset manager with assets in excess of $3 trillion, according to the Cerulli report, “Global Markets 2013.”

While the trend for consolidation in the asset management industry is not a new one, "there has definitely been a quickening of pace since the financial crisis," said Shiv Taneja, the firm's London-based managing director for international research, in a statement, noting that the global financial crisis took $10 trillion off the table within a few months in 2008, leading to a consolidation of the industry as brand and balance sheet took center stage.

This benefited the bigger, better capitalized managers, Taneja said, which has created some concerns. “Big firms can do many good — and not so good — things. Regulators have a huge role to play here, and in their desire to boost investor protection, a good thing, should ensure they do not make it tough on smaller firms.”

The top 10 asset managers by global assets under management (AUM) as of December 2012 are:

1. BlackRock, $3.79 trillion
2. State Street Global, $2.01 trillion
3. Vanguard Group, $2 trillion
4. PIMCO, $2 trillion
5. Fidelity Investments, $1.69 trillion
6. AXA Group, $1.47 trillion
7. J.P. Morgan Asset Management, $1.4 trillion
8. Bank of New York Mellon, $1.39 trillion
9. Deutsche Asset Management, $1.25 trillion
10. Capital Group, $1.08 trillion

Cerulli also found that while a globally consolidated product range may be “the holy grail” for most multinational asset management firms, “distribution is still a regional affair, and in many cases, quite a local one.”

The “highly sophisticated” U.S. market has a higher degree of fragmentation within its distribution channel structure — a positive, according to Cerulli — compared with the banks and insurance companies that dominate Europe and Asia and to some extent Latin America.

Cerulli broke down U.S. distribution of global mutual fund AUM to include: institutions, at 18.7%; discount trading platforms and mutual fund supermarkets, at 18.6%; private defined contribution 401(k)s, at 15.7%; wirehouses, at 12.4%; private client and bank trusts, at 8.4%, registered investment advisors, at 8.3%; independent broker-dealers, at 6.2%; regional BDs, at 6.0%; product manufacturers, at 3.7%; and bank BDs, at 1.1%.

While concentration of the asset management industry is most obvious when the global data is looked at in aggregate, it is also evident when measured on the national level, Cerulli concludes. For instance, six out of 10 selected countries show retail asset concentration levels at more than 70% for the top 10 managers/recordkeepers operating in a country. The figure for retirement assets is even higher, with seven out of 10 selected countries showing concentration levels in excess of 70%.