Assets managed by the worlds largest 500 fund managers rose by over 8% to $68 trillion in 2012 according to research by actuaries Towers Watson.
Its report, Pensions & investments/Towers Watson World 500, published today, said the increase made up any lost ground from the previous year when assets fell by 3%. Due to the rise, total assets are now almost back on track to the record levels of 2007 and almost double assets levels from 2002.
Craig Baker, global head of research at the firm, said 2012 was a less volatile year and combined with market rises, he was not surprised that 'most large investment managers gained assets'.
'Looking back over a longer period reminds us how dramatically the asset management industry has grown, virtually doubling in terms of asset size, in the past decade,' he said.
'While this is informative, the real question to ask is how much value it has contributed to investors and end beneficiaries, and broader society, versus how many assets it has just gathered for itself during this time.'
The research revealed that, by number, bank-owned asset managers continued to dominate the top 20, although the number of independent managers in the group remained static. This included 12 US-based investment managers with more than 64% share of assets, while eight managers were European-based. Overall Japanese managers' assets decreased by around 9% in 2012, while European and US-based managers' assets increased by over 8% and around 13% respectively.
Baker added: 'It is imperative that the pressure on asset managers, and other agents in the investment industry, to produce better aligned fee structures does not dissipate, particularly in the area of performance-related fees.'
He added that investors needed to stop looking at lower-cost options, particularly if they had limited governance, 'while ensuring they are not overpaying for market returns'.
'Institutional investors are increasingly looking for the most efficient way to invest their assets which has led to more passive management and low cost, systematic approaches... known as smart beta. While smart beta is not a substitute for good active management, it allows investors to target their active exposure in strategies which cannot easily be replicated through a systematic approach and where there is evidence of real skill.
'Asset owners are quite rightly becoming far less tolerant of paying active management fees for simply getting market exposure and are looking to obtain the latter as cheaply and efficiently as they can. However, they should be aware of the marketing bandwagon effect that has developed around smart beta in the past few years, with too many products just trying to cash in,' said Baker.
Some of the main 'gainers' in the top 50 during the past five years include: Royal Bank of Canada, Sumitomo Mitsui Trust & Bank, Shinkin Central Bank, New York Life Investments and Affiliated Managers Group.