Home ListingFebruary 11, 2014

PwC: Asset Management to Surpass $100 Trillion by 2020

The industry's AUM is projected to nearly double, with North America still dominating at $49 trillion.

Reported by Featured Author

(February 10, 2014) – If advisory giant PwC is to be believed, asset owners and managers had best begin shopping for larger offices.

A report focused on asset management in 2020 projected not only an increasingly globalized, data-centric industry, but also one almost twice the size of its present $64 trillion. PwC analysts identified a convergence of factors contributing to the nearly 6% compound annual growth rate anticipated over the next six years.

“Growth in assets will be driven by three key trends: the government-incentivized shift to individual retirement plans; the increase of high net worth individuals from emerging populations; the growth of sovereign wealth funds,” the report predicted.

Geographically, North America would sustain its dominant market position, managing $49.4 trillion of the $101.7 trillion global asset pie by 2020. However, PwC foresaw the greatest growth outside of the developed western world: South America, Asia, Africa, and the Middle East.

The “mass affluent” middle and upper-middle classes thought to emerge from these regions could contribute enormously to assets under management, as great swaths of society begin to save for retirement.

The third key factor contributing to an explosion of assets under management—sovereign wealth funds—were projected to nearly double in aggregate size between 2012 and 2020.

“There has been a rapid accumulation of foreign assets by many of these sovereign funds, particularly by oil-exporting and some Asian nations, thanks to high oil prices, financial globalization, and sustained large global imbalances,” the report stated. “This trend is set to continue over the next decade.”

According to the analysis, the $5.2 trillion held in sovereign wealth vehicles in 2012 will likely proliferate at a roughly 7% compound annual rate, reaching $8.9 trillion six years from now.

PwC opened its bold report—titled “Asset Management 2020: A Brave New World”—with a word of caution: “These predictions are, of course, just that—predictions,” based on “matters that are, to different degrees, uncertain and may turn out to be materially different.”