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Laxman Pai, Opalesque Asia: North American assets under management (AUM) totaled $43 trillion in 2018, a 7% increase from the previous year, but overall industry profits (excluding alternative investments) fell 3.7% from the year before to $42.6 billion, according to the report.
According to the latest report from McKinsey & Co, net flows for the year were anemic, and the drop in both equity and bond markets late in the year made for a weak fourth quarter and a challenging start to 2019.
The macroenvironment of 2018 was a source of both opportunity and outsize challenge to asset managers, it said.
As institutional and retail clients alike faced the realities of a "lower for longer" environment in global economic growth and interest rates. These developments have in turn encouraged meaningful growth in demand for yield-generating assets such as credit, as well as for private-market investments such as infrastructure and real estate, said the report.
The overwhelming influence of interest-rate policy led not only to heightened volatility but also to continued high correlation among stocks as well, further eroding the foundations of fundamentals-based security selection.
In 2018 some 70 percent of assets in domestic equities underperformed their passive equivalents after fees-adding to the pressures on this already-beleaguered sector and accelerating the shakeout of underperforming active equities managers.
Across multiple product and vehicle categorie...................... To view our full article Click here
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