Assets under management (AuM) at the world’s 500 largest asset managers reached a new record of over $131trn in 2021, research from the Thinking Ahead Institute has revealed.

The research, which was conducted in conjunction with US investment newspaper Pensions & Investments, detailed that this represented an increase of over 10 per cent on the previous year, when assets had grown by 14.5 per cent to over $119trn.

Additionally, it was revealed that BlackRock was both the world’s largest asset manager and the first to exceed $10trn in AuM.

The Vanguard Group was ranked second (breaking the $8trn mark), ahead of Fidelity Investments and State Street Global – ranked third and fourth respectively – each with AuM of around $4trn.

The research also reported that there existed a disproportionate number of US managers at the top of the rankings, accounting for 15 out of the 20 largest firms and around 82 per cent of these assets.

This share was “boosted” both by US managers Invesco and Wellington Management joining the top 20 and, more broadly, as a result of consolidation and competition, as 218 manager names that featured in the ranking 10 years ago were absent in the most recent ranking.

The research revealed that passively manged funds grew by 12.1 per cent during the year, faster than actively managed assets which grew at 9.5 per cent, and now account for over 29 per cent of assets – a record high.

It was also found that assets allocated to environmental, social, and governance (ESG) principles increased by over 4 percentage points to reach over 60 per cent of assets, and allocations to liability-driven investment (LDI) strategies slowed marginally to 13.9 per cent of total assets, down from 14.2 per cent a year before.

Thinking Ahead Institute co-head, Marisa Hall, commented: “Investment managers are facing a combination of long-term headwinds from macro-economic, geopolitical and climate risks – but are also spurred on by the driving factors of technology and industry innovation. This is a story of dark clouds on the horizon, potentially matched by a powerful engine room of innovation.

“Consolidation is an obvious symptom of a changing investment industry, but bigger is not always better. Specialism is still sought after with genuine boutiques and smaller global managers proving that standing out for the right reasons can be as strong a business model as offering standardisation.

“Asset managers are adapting as organisations and we’re seeing competitive pressures manifest in a reassessment of the skills and structures that drive success. For example, healthy scrutiny of sustainability claims is leading to enormous demand for climate and environmental specialists.

“Meanwhile, modern expectations for digital client service and a need for rigorous data-led investment processes are separately driving total re-evaluations of operational technology. These trends mean we’re not just seeing a shift in the rankings – but also a shift in what it means to be a successful asset manager.”

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