Global Fund Groups Set To Hit $200tn

Global fund groups set to hit $200tn in assets by 2030, says PwC

The global fund management industry is expected to reach 200 trillion dollars in assets by the end of the decade, rising from 139 trillion dollars in 2024, according to new projections from PwC. The consultancy said private markets were on track to generate more than half of industry revenues as investors seek higher returns and broader access to unlisted assets.

The forecast is based on a survey of 300 asset managers, distributors and institutional investors. It estimates that private markets revenues could climb to 432 billion dollars within five years. PwC said the shift would be driven by falling inflation and interest rates, which could prompt investors to move cash into higher-growth investments.

Albertha Charles, global asset and wealth management leader at PwC UK, said asset managers were preparing for a structural change in how capital is allocated. She said lower rates would support a rotation into investment products after several years of cash accumulation by households and institutions.

Despite the growth outlook, profitability remains under pressure. Almost nine in ten asset managers surveyed reported margin strain over the past five years. PwC’s modelling shows that profit relative to assets under management has fallen 19 per cent since 2018 and could decline a further 9 per cent by 2030. Rising operating costs and fee compression remain the biggest challenges.

Charles said private markets would anchor a large part of industry expansion but warned that the benefits would not be evenly shared. Firms that fail to differentiate or modernise their business models risk falling behind during the next phase of growth.

The move into private assets comes as public equity markets continue to experience a slowdown in initial public offerings. At the same time, policymakers in the United States and Europe are taking steps to widen retail access to private assets, including reforms allowing US 401k retirement plans to allocate to private equity. In the UK and Europe, vehicles such as the Long Term Asset Fund are intended to offer a mix of private and liquid assets to individual investors.

Passive investing is also expected to expand significantly. PwC estimates that index-tracking funds could reach 70 trillion dollars in assets under management by 2030, up from around 40 trillion dollars last year. With lower fees and predictable market exposure, passive strategies continue to take share from traditional stockpicker-led funds.

Cost remains a priority for institutional investors. Nearly three fifths of those surveyed said they were likely or very likely to replace existing fund managers with cheaper alternatives if high fees persisted.

The report also highlights a growing contest in the wealth management sector, particularly for affluent individuals who are among the fastest-growing investor groups globally.

Regionally, Asia-Pacific is set to be one of the strongest drivers of asset growth. PwC points to rising incomes across the region and efforts by Japan to move household savings into markets as significant catalysts for industry expansion.