AUM in Canada rose 14% in 2020

Despite a pandemic rocking the global economy, investors piled into managed investments in 2020, pushing global assets under management (AUM) to over US$100 trillion, according to new research from the Boston Consulting Group (BCG).

Global AUM for all professionally managed assets (including insurance and pension funds) rose by about 11% last year to US$103 trillion, with about 41% of that amount representing retail investment and 59% institutional, the Boston-based consulting firm reported.

“Retail investors were the main drivers of AUM growth,” it said, noting that global net inflows came in at US$2.8 trillion for the year. Inflows represented about 3.1% of AUM at the start of the year, which was well ahead of the average over the previous decade (1% to 2%).

According to the report, growth in Canada outpaced both the U.S. and the global industry, with AUM rising 14% during the year to US$3.6 trillion.

BCG noted that retail investment is gaining share in Canada, adding that “the rising share of the market and the increasing sophistication of retail investors present asset managers with an opportunity worth monitoring.”

Looking at the global industry, BCG reported that growth in passive investments outpaced the overall market, with passive AUM surging by 17% during the year, powered by a combination of strong net inflows and market gains.

“This trend is expected to continue over the next five years, with growth forecast at 9% annually,” BCG said.

Certain active categories also generated strong asset growth in 2020, it noted, including large-cap equity funds, government-focused fixed-income funds, money market funds and specialized products.

However, these trends are not expected to continue in the years ahead. In fact, the report forecasted that these categories will be among the slowest growing product groups over the next few years.

The report also said distribution has been forced to evolve in response to the pandemic.

“The asset management industry is coming out of the global crisis with significant changes, especially in distribution,” said Lubasha Heredia, managing director and partner at BCG, in a release.

“These present challenges but also multiple opportunities for growth,” she said. “The next big task for all industry players will be to carve out a suitable growth strategy as they refocus on the core areas of differentiation and advantage, which could be any combination of client engagement models, investment products, operating models or talent strategy.”

James Langton

James is a senior reporter for Advisor.ca and its sister publication, Investment Executive. He has been reporting on regulation, securities law, industry news and more since 1994.