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Record Growth in Global Asset Management

In 2024, the global asset management industry achieved a historic milestone, amassing a staggering $128 trillion in assets under management (AuM). This reflects a 12% increase compared to the previous year and confirms a strong rebound from the downturn experienced in 2022. The data comes from the latest report by the Boston Consulting Group (BCG), titled Global Asset Management 2025.

Notably, this growth was primarily driven by market performance, which contributed to 70% of the industry's revenue growth in 2024. This reliance on external market conditions underscores a critical vulnerability within the industry, signaling an urgent need for transformative strategies.

The Context of Recovery

As asset managers navigate this growth phase, the report reveals that their path forward is riddled with structural pressures that necessitate adaptation. Market volatility and evolving investor preferences are compelling firms to rethink their business models and innovate their offerings.

Dean Frankle, BCG's managing director, emphasized the importance of redefining directions for future success. He noted that the winners in the upcoming decade won't merely endure challenges but will define their futures through innovation.

Key Forces Reshaping the Asset Management Landscape

The report identifies three significant forces that are currently reshaping the asset management industry:

1. Product Innovation in Response to Investor Demands

The evolving product landscape provides asset managers with critical opportunities to innovate. There's a noticeable shift towards actively managed products, particularly in active exchange-traded funds (ETFs), which are entering a high-growth phase. In 2024, 44% of newly launched ETFs were actively managed, reflecting a compound annual growth rate (CAGR) of 39% over the past decade. Although these funds still represent a small share of the total ETF AuM, they offer competitive fees that can attract more investors.

Additionally, the rise of semi-liquid private asset funds—growing over fivefold in four years—indicates an interest in alternative investment avenues. These funds now exceed $300 billion in net asset value and are appealing to investors seeking higher risk-adjusted returns. However, reaching retail clients with these private markets requires overcoming regulatory and educational hurdles.

2. The Necessity for Consolidation and Digital Transformation

To gain a competitive edge, asset managers are increasingly pursuing strategic partnerships and mergers and acquisitions. A BCG study found that the average asset manager doubled its AuM between 2013 and 2023, compelling smaller firms to adopt leaner, more efficient operational models. Large firms benefit from economies of scale, enabling them to enhance their technological capabilities and streamline operations.

3. Cost Management and Efficiency

As firms emphasize operational efficiency, artificial intelligence (AI) emerges as a transformative force in the industry. GenAI is being utilized for process automation and product delivery, particularly in complex areas such as alternative assets. The focus on cost discipline is becoming strategic, with firms needing to scrutinize where they can create unique value while operating leaner.

Renaud Fages, another BCG managing director, noted that firms are reevaluating their value propositions, leading to significant technology initiatives with transformative potential.

Conclusion

The global asset management industry stands at a crossroads in 2024, with unprecedented growth juxtaposed against considerable challenges that require urgent reinvention. The evolution of investor preferences, market dynamics, and technological advancements will dictate the industry's future trajectory. Firms that successfully navigate this landscape will be those that innovate, consolidate strategically, and maintain strict cost management to thrive in an increasingly competitive environment.