Asset managers have rough waters ahead
Asset management strategy consultant, Casey Quirk, has predicted that publicly traded asset managers are unlikely to perform well in 2023 following a tumultuous two years.
Asset management strategy consultant, Casey Quirk, has predicted that publicly traded asset managers are unlikely to perform well in 2023 following a tumultuous two years.
While 2021 saw asset management businesses grow organically and median assets under management increase 14%, revenue and profits both grew 20% and 33%, respectively, to reach all-time highs, 2022 brought about a decline in organic growth of 1%, median assets under management shrunk 16%, and revenue and profit both dropped by 4% and 6%, respectively. Traditional managers were the ones to blame for the drop, while alternatives managers flourished.
Private equity firms and other alternative asset managers had median AUM growth of 11% and median revenue growth of 20%, with profits growing by 27% due to strong capital raising and successful expansion into new and affiliated market segments. On the other hand, traditional asset managers saw a decline in AUM, revenue, and profits due to volatile publicly traded equity and debt markets. Headcount growth for traditional managers was at 1%, while alternative asset managers saw a 14% increase.
The industry is expected to face more pressure as top-line pressure increases in 2023, and both traditional and alternative managers will need to consider their investments in talent and technology. Despite the relatively stronger performance of alternative managers, they too will need to be careful.
