⦿ Executive Snapshot

• What: Global assets under management (AUM) reached a record $128 trillion in 2024, with projections of an additional $9.6 trillion by 2035.
• Who: Key players include asset management firms and financial analysts from BCG, McKinsey, Deloitte, Accenture, and Moody's.
• Why it matters: The asset management landscape is evolving, with significant disparities emerging between top-performing firms and their mid-sized counterparts.

⦿ Key Developments

• Firms with over $2 trillion in AUM maintain margins around 45%, while those below $500 billion are at 36%, and mid-sized firms struggle at just 26%.
• Passive funds are significantly cheaper, charging up to 60% less than active funds, with specialist buyout funds achieving pooled IRRs of 17% compared to 13% for generalists.
• Tokenised real-world assets are expected to exceed $100 billion by 2026, driven by regulatory clarity from the GENIUS Act and the Digital Asset Market Clarity Act.
• More than half of global asset managers have upgraded their cybersecurity frameworks amid rising cyber risks associated with AI.
• The demand for sustainable investments continues to grow, particularly in the Asia-Pacific region, with 64% of APAC managers planning new sustainable product launches this year.

⦿ Strategic Context

• The asset management industry is experiencing a widening gap between well-positioned firms and those struggling to adapt to market changes, highlighting the need for strategic operational choices.
• The rise of tokenisation and advancements in AI signify a shift in the industry, moving from traditional asset management practices to more innovative and technology-driven approaches.

⦿ Strategic Implications

• Firms that leverage AI as a core strategy and embrace tokenisation will likely outperform their peers, generating higher profits and operational efficiencies.
• The maturing ESG landscape indicates a shift towards more impactful investment strategies, prioritizing the decarbonisation of high-emission companies.

⦿ Risks & Constraints

• Regulatory challenges and the need for robust cybersecurity frameworks pose significant risks for asset managers navigating the evolving landscape of AI and tokenisation.
• The geopolitical landscape's instability could disrupt investment flows and operational strategies if firms do not adapt their risk frameworks accordingly.

⦿ Watchlist / Forward Signals

• Upcoming regulatory developments regarding tokenisation and digital asset management will be critical in shaping the future of asset management.
• Monitoring the growth of private markets and their revenue contributions will provide insights into the industry's evolving dynamics and opportunities for asset managers.