ETF providers have taken the top three places in a ranking of global asset managers by assets under management (AUM), according to a report from risk management and investment consultants Willis Towers Watson.
ETF issuers BlackRock, Vanguard and State Street Global Advisors hold the top three slots in a ranking of global asset managers by AUM.
The annual Willis Towers Watson report details the total AUM of the world’s 500 largest asset managers. Collectively the group account for $81.2 trillion in AUM as of the end of 2016, representing a rise of 5.8% on the previous year.
BlackRock has retained its position at the top of the league table for the eighth consecutive year, with over $5.1tn in total firm AUM. The asset manager owns iShares, the world’s largest provider of ETFs by AUM.
It was placed comfortably ahead of runner-up Vanguard, another giant in the ETF world, which recorded over $3.9tn in total assets.
State Street Global Advisors, the asset manager behind the SPDR range of ETFs, came third on the list, with total global AUM of over $2.4tn.
The top 20 list contained several other significant players in the ETF space, including JP Morgan (fifth with $1.7tn), and Goldman Sachs (tenth with $1.3tn), as well as Europe-based ETF providers such as UBS (thirteenth with $1.2tn), Deutsche Bank (fourteenth with $1.1tn) and Amundi (fifteenth with $1.1tn).
The 20 largest asset managers experienced a 6.7% annual increase in AUM, which now collectively stands at $34.3tn. The share of total assets managed by this group of 20 largest managers increased for the third year in a row, rising from 41.9% in 2015 to 42.3% by the end of 2016.
Assets under management for North American managers increased by 7.7% over the period and now stands at $47.4tn, whilst assets managed by European managers, including the UK, increased by 2.8% to $25.8tn. UK-based firms, however, saw AUM decline for the second consecutive year, falling by 4.5% in 2016 to $6.3tn.
The report showed that passively managed assets are accounting for a larger share of total assets at the expense of active management. The findings reflect the substantial inflows recorded into ETFs globally, attracting $433bn in net new assets in the first nine months of 2017.
Although the majority of total assets (78.4%) are still managed actively, its share has declined from 79.7% a year ago as passive management continues to make inroads.
Luba Nikulina, global head of manager research at Willis Towers Watson, said: “Whilst passive assets remain significantly smaller than actively managed assets, the proportion of passively managed assets has grown from 16.5% to 21.6% over the last five years alone. We expect that this trend will continue to put downward pressure on traditional fee structures, particularly amongst active managers seeking to remain competitive and to maximise value to investors.”
The research also found increased awareness in sustainable investing, with 78% of firms surveyed acknowledging a growing interest from their clients for these sorts of strategies as they continue to look for ways to add value for clients.
While socially responsible ETFs have been identified for several years as possessing high potential growth within the ETF industry, this finding suggests there is still significant room for development, both in terms of the number of products available and the level of assets dedicated to these strategies.