PARIS and NEW YORK, March 10, 2022 /PRNewswire/ — Indefi, a leading strategy advisor to asset managers worldwide, today released new research showing that globalization, a major trend in the asset management industry over the past 20 years, will atrophy by 2030, with less than a fifth of investment flows entering cross-border investment.
According to Indefi, asset managers will find it increasingly difficult to manage global businesses as cross-border investment declines. The new research paper titled “The future is now: five waves to reconfigure asset management”, predicts that by 2030, national equity, fixed income and alternative markets will garner close to 20 trillion dollars in net new money, almost four times more than the $4.5 trillion net flows to international equity, fixed income and alternative markets over the same period. Moreover, 85% of investments will be local investments compared to cross-border investments by 2030, compared to 74% in 2021, a substantial change.
This trend is also fueled by another important wave in asset management: the importance of the individual, not the institution. According to Indefi, by 2030, retail investors will account for more than 61% of global assets under management, up from 52% in 2021. Meanwhile, institutional assets are slowly losing ground, from 31% in 2021 to 26 % according to projections, out of a total $175 trillion by 2030. Similarly, by 2030, 67% of industry revenue will come from retail investors, up from 61% in 2021. This shift is also helping to fuel de-globalisation, as retail investments are generally more regulated than their institutional counterparts. With more money “staying at home” and in retail vehicles, de-globalization will accelerate.
In addition, new research from Indefi shows that China will provide almost half (45%) of net new investment flows to asset managers by 2030 compared to 29% of the total from the United States and will account for almost one-fifth of all assets in the asset management industry by 2030. While the United States will continue to be the largest market in terms of assets under management (AUM), China will represent 18% of total global assets under management by 2030, up from 11% in 2021, while the US market will grow from 52% of assets under management in 2021 to 46% by 2030. Europe and the UK is expected to retain approximately the same percentage of global assets under management, with the UK capturing only 2% of net new investment flows until the end of the decade.
The new research identifies and examines five secular trends that will significantly alter the asset management industry:
- Individual investors will dominate
- Globalization of asset management will shift to more domestic investments
- Results, including sustainability, will be more important than returns
- An expanded investment toolkit will include private markets and cryptocurrency
- Artificial intelligence will play an increasing role in the investment industry
“If a portfolio manager teleported from 2020 to 2030, they probably wouldn’t recognize their sector,” said Daniel Celeghin, Indefi’s managing partner and co-author of the paper. “With the growing importance of retail in asset management, more domestic investments are gaining traction, technologies such as artificial intelligence and cryptocurrency making significant inroads, and the growing footprint of Chinawe expect the standards of 20th century asset management to change dramatically by the end of the decade,” he said.
In the new paper, Indefi also shows that cryptocurrency investments are already larger by market capitalization than the entire high yield bond asset class, and about half of the entire bond market. municipal. And artificial intelligence will gain traction in the industry, not yet replacing portfolio managers, but rather helping professionals in investment, distribution and corporate management do their jobs more efficiently.
Founded in 2007, Indefi is a strategic advisory firm serving the asset management industry. Company leaders have partnered with more than two-thirds of the world’s largest asset and wealth managers, with a focus on developing and implementing growth strategies. Based in both Paris and new YorkIndefi’s expertise spans across the Americas, UK, Europe, Asiaand Australia. The company focuses on the asset management business: market entry, product development and enhancement, sustainability strategy, organizational design and incentives, acquisition support and other growth drivers. Indefi is a A PRICE signatory. For more information, visit www.indefi.com.
SOURCE INDEFI Group