Investment managers unprepared for five more years of slow deposits won’t be protected by an improving economy and a resurgent stock market, according to a new study on the industry.
Firms globally will see annual growth from new client money of 0.6% through at least 2017, consulting firm Casey Quirk & Associates LLC said in a paper published Tuesday. Many managers will struggle with shrinking revenue as much of the growth will be concentrated in companies that specialize in niches such as alternative-investment strategies, or that sell to customers in emerging economies.
'Market appreciation at any level won’t be enough to save asset managers focused on selling outmoded products to slower-growing investors', Benjamin Phillips, a partner at the Darien, Connecticut-based firm, said in an interview.
Asset managers globally enjoyed growth from deposits of 6% to 7% in the three years through 2007, according to Casey Quirk. The next four years, marked by the piercing of the U.S. housing bubble and the subsequent financial crisis, saw growth of close to zero.
Industry revenue will rise to $483bn in 2017 from $352bn in 2012, according to the study. Capital appreciation is projected to account for 89 percent of that growth. The study, which doesn’t single out any companies, covers mutual-fund providers, private equity, hedge funds, bank-owned firms and other investment managers.
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