This represents an aggregate 10.9% growth for U.S. professionally managed assets over year-end 2012, Cerulli observes in its recent report, “The State of U.S. Retail and Institutional Asset Management 2014: Assessing Channel Opportunities for Future Growth.”
Alexi Maravel, an associate director at Ceruilli, says the sheer magnitude of the United States’ professional asset management market makes it difficult to truly size. He suggests Cerulli’s analysis is more reliable than other total market counts because the research team actively assesses and eliminates overlap among channels that often creates double-counts in other analyses. “In order to provide a more accurate assessment of the U.S. addressable market, we remove these assets,” he notes.
Indeed, as of year-end 2013, when adding up the nominal totals of all U.S. active management distribution channels, the entire U.S. market stood at nearly $48.9 trillion. This is up strongly from the 2008 low of almost $33 trillion and a 12.1% increase for the past year alone. Cerulli stresses that this top-line figure can be useful for assessing the relative size of each active asset management market, but the number includes significant asset overlap between channels. After the proper adjustments, Cerulli says the size of the U.S. professionally managed market is actually a little shy of $37 trillion.
Institutional client assets grew at a slightly lesser rate (10.6%) in 2013 than did retail channel assets (10.9%), Cerulli says. Institutional assets have grown at a higher rate than retail assets over the last 10 years, however, growing 5.5% compared with retail’s 4.8% for the time period. The growth in professionally managed institutional client assets has in large part been driven by strong growth in participation at employer-sponsored defined contribution (DC) retirement plans. Indeed, from 2009 through 2013, DC assets grew at a compound annual growth rate of 11%, Cerulli says.
Besides putting a total count on the professional asset management industry in the U.S., Cerulli’s analysis suggests the U.S. asset management market is undergoing fundamental changes. Investment losses and the breakdown of traditional investment models during the most recent global financial crisis are still fresh in investors’ minds, the report explains, leading to increased attention to objectives-based investing and liability-driven investing (LDI) solutions.
Information on how to obtain Cerulli Associates’ reports is available here.