The value of the assets managed by the world's 500 largest fund managers fell by 2.5% last year, according to research published by Towers Watson this week.
The consultancy's World 500 report found that at the end of December 2011, the total assets under management by the top 500 managers were worth $63 trillion. This comes after two consecutive years where the value of the assets they managed increased - by 16% in 2009 and 4% in 2010.
Craig Baker, global head of research at Towers Watson Investment, said: '2011 was another volatile and unpredictable year for most asset managers with patchy performances depending on size, strategy and asset class.
'Developments in the second half of 2011 and into 2012 remind us that the weak underlying economic fundamentals have not changed much and risk appetites remain understandably subdued among institutional investors.'
The biggest hit was taken by the top 20 asset managers, who saw the value of their assets under management fall by around 7%. As a result, their share of the total value of the top 500 managers' assets fell from 40.7% to 38.7%.
Bank-owned and independent asset managers continued to dominate the top managers list last year, each accounting for 8 of the top 20. The remaining four were insurer-owned asset managers.
Geographically, 11 of the top 20 asset managers last year were based in the US, managing 64% of the assets for this group, with another eight based in Europe - managing 33% of assets - and one in Japan - managing 3% of assets.
However, in the broader top 500, Japanese asset managers were the only regional grouping to see the value of their assets increase last year - up 6% - while European managers' assets declined in value by 7% and those in the US saw a 1% fall.
Baker noted that the largest 20 asset managers were the 'biggest losers' last year, reversing the trend seen in recent years. 'The pressure is back on asset managers as performance fees dry up in falling markets and clients demand concessions on fees as well as exploring lower cost options,' he said.
'Although managers that have learned the lessons of the last few years - those of tight overhead control, reducing product proliferation and better aligning fees - are more likely to have remained profitable.'
For the third consecutive year, US-based BlackRock held the largest value of assets under management at the end of 2011, totalling $3.5trn. As was the case at the end of 2010, it was followed by German-based Allianz Group ($2.1trn) and US-based State Street Global ($1.86trn).