Global assets under management (AUM) increased by 12 per cent year-on-year to a record high of $128trn at the end of 2024, according to Boston Consulting Group’s (BCG) Global Asset Management report.

This strong improvement was driven by market performance, which was responsible for 70 per cent of asset managers’ revenue growth during the year, marking a rebound from the decline it suffered in 2022.

However, the recovery came amid mounting structural pressures that require urgent reinvention, BCG stated.

The group highlighted that the majority of gains coming from market performance underscored the industry’s vulnerability to external conditions, and the need for reform to ensure the sector remains competitive, especially in the context of market performance in 2025 so far.

It also noted that persistent fee compression, shifts in investor preferences, and digital disruption were pushing firms to redesign their business models, accelerate cost innovation, and sharpen their strategic focus.

“The winners of the next decade will not be those who simply weather the storm, but those who redefine their future direction,” commented BCG managing director and partner, and co-author of the report, Dean Frankle.

“Recent market volatility could serve as a catalyst for change, and asset managers will need to shift from recovery mode to innovation mode - rethinking how they deliver value, engage clients, and run their businesses.”

BCG’s report also looked into the forces that were reshaping the industry, which included the opportunities to create new products amid shifting investor demands.

It argued that asset managers can ‘claim’ a larger portion of an important, but shrinking, pool of actively managed assets in active exchange-traded funds (ETF), model portfolios, and separately managed accounts, and can mobilise to play a key role in the growing market for delivering private assets to retail clients.

Furthermore, the group highlighted the need for consolidation and digital transformation, and a renewed focus on cost.

“Cost discipline is now strategic,” stated BCG managing director and partner, and co-author of the report, Renaud Fages.

“Winning firms are asking tough questions about where they can create unique value and where they must be radically lean. They will also double down on strategic technology initiatives that have transformative potential.”

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