World’s Largest Asset Managers Lost $18T in 2022, According to WTW

The largest 500 asset managers by assets under management saw their total discretionary assets decline by $18 trillion, or 13.7% in 2022, according to research from WTW’sThinking Ahead Institute. At the end of the year, AUM at the largest 500 asset managers was $113.7 trillion.

While the difficult investment climate in 2022 was cited as responsible for the drop in assets under management, WTW’s Jessica Gao, associate director of research at the London-based Thinking Ahead Institute, said challenges from system-level risks, such as climate change and other sustainability issues, continue to mount.

Asset declines varied by region. According to the report, Japanese managers within the top 500 lost an average of 5.5% in assets, while North American and European managers saw average declines of 14.2% and 16.8%, respectively. North American managers accounted for 59.5% of all AUM within the top 500 managers, equaling $67.7 trillion at the end of 2022.

Of the largest 20 asset managers, 14 are in the U.S., and the other six are European. More than half (12) are independent firms, six are bank-affiliated and two are owned by insurance companies, WTW found.

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2022 was a turbulent year for the markets, with high inflation, interest rates and geopolitical tensions all having negative effects. Gains made in the bull market of 2021 were largely wiped out in 2022, according to the report.

“As we have conducted this research, a common theme throughout our conversations with managers has been to expect a higher-for-longer regime in interest rates in which concerns about inflation and growth remain elevated, suggesting investment managers are not out of the woods yet,” Gao said in a press release. “The need to consider sustainability issues and adapt to systemic risk means forward thinking and robust investment processes that are able to model and measure risks like never before. Looking ahead, this awareness of system-level risks could offer support to the investment world as it grapples with the generational challenge of climate change impacts and other sustainability issues.”

According to the report, the average asset allocation for 2022 was 45.1% in equities, 32.3% in fixed income, 7.9% in cash, 7.1% to alternative investments and 7.6% to other asset classes (including balanced funds/strategies, multi-asset funds, derivatives, commodities, private debt and others). Equities also had the largest decline, at 19.6%. Fixed income followed, declining 14.5% during the year. Alternatives declined 7.2% in 2022.

The research also found that investment in passive strategies accounted for 34.7% of the total market, up four percentage points from its share one year earlier. Actively managed assets represented 65.3% of the total, down two percentage points from the prior year.

The value of actively managed assets decreased 19% in 2022, while the value of passively managed assets dropped 13.7%, WTW’s research found.

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Tags: Jessica Gao, WTW, WTW Thinking Ahead Institute

Scott Lupkas, who became vice president of investments at the Yale New Haven Health System in February 2022, is no longer with the organization, according to a system spokesperson. No reason was given for his departure, and the spokesperson said the system does not comment on personnel matters.

For fiscal 2022, ending September 30, 2022, covering Lupkas’ first eight months on the job, the system’s annual report did not break out data on its investment portfolio. Calendar 2022 was a tough one for capital markets, with the S&P 500 losing 19.6% and the Bloomberg U.S. Aggregate bond index down 13%.

But a KPMG audit of the organization showed the health organization suffered a $572 million loss in fiscal 2022, $385 million from investments, which were valued at $3.6 billion as of September 30, 2022. Higher expenses accounted for much of the other red ink. The year before, YNH was in the black overall, $647 million, with $563 million in investment gains.

Before joining YNH, Lupkas for two years headed pension investments at Raytheon Technologies Corp., now a part of RTX Corp. Previously he served almost six years as a senior managing director for retiree medical benefits at the United Auto Workers. He could not be reached for comment.

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Shortly after Lupkas’s arrival, Geeta Kapadia, who had been director of investments at the Yale health-care nonprofit for 13 years, was appointed CIO of Fordham University in August 2022.

Two lower-ranking investment officials followed her: David Pearson, an investment analyst at YNH, was named associate director of investments at Fordham, and Mallika Nair, a YNH investment strategist, left to become senior director of investments at Fordham (she was part of CIO’s 2022 class of NextGens).