PwC predicts that global Assets under Management (AuM) will almost double by 2025, from $84.9 trillion in 2016 to $145.4 trillion by 2025. The report warns that firms need to take action now to survive the exponential level of change. Active management will continue to grow, reaching $87.6 trillion by 2025, while passive management will reach $36.6 trillion (25% of global AuM). Alternative asset classes, such as real assets, private equity, and private debt, will more than double in size, accounting for 15% of global AuM. The industry’s involvement in niche areas such as trade finance, peer-to-peer lending, and infrastructure will also increase. The report also predicts that assets will grow at 5.7% a year in North America, 4.0% per annum from 2020 to 2025, and 8.4% and 3.4% per annum respectively. The Asia-Pacific region is expected to experience growth of 8.7% a year from 2016 to 2020, accelerating to 11.8% from 2020 to 2025.
PwC forecast that active management funds will increase from $60.6 trillion in 2016 to $86.6 trillion by 2025, while passive investments will gain a significant market share. Passives’ assets under management will double, from $14.2 trillion to $36.6 trillion, while alternatives will rise from 12% to 15%. Both passive and active investments will be key building blocks in balanced portfolios. Asset and wealth managers will fill financing gaps resulting from the global financial crisis, with their involvement in trade finance, peer-to-peer lending, and infrastructure will increase. Governments will rely on individual retirement accounts and defined contribution plans to help people save for retirement. Investment firms will provide capital in trade finance and syndicated lending activities, and infrastructure assets will expand more than fivefold. Technological developments, such as machine learning, AI, Robotic Process Automation, and blockchain, will impact asset and wealth management, requiring asset managers to design new products and services.
Source: PWC