Seeking relevance in a shrinking asset management sandbox

THE asset management industry has not been exempted from the doom and gloom surrounding the financial services industry. The same forces that have made the sell-side's fees shrink, regulatory scrutiny increase, traditional sources of alpha more elusive, and various lines of business encroached by disruptive technology, have been affecting the buy-side industry as well.

But before we collectively throw in the towel and get out of town, it is perhaps instructive to take stock of how we got here and what the future holds for our once august industry.

The business of managing other people's money professionally and prudently goes back over a century. Today, the size of financial assets under management - some estimates place it at over US$70 trillion globally, which at an average total expense ratio of 100 basis points yields US$700 billion in fees - makes it one of the most important sectors of the global economy. Depending on what time of day you measure its market capitalisation, Greater China's equity capital market, for instance, is worth close to 20 per cent of that, while the world's top 10 asset managers manage over 25 per cent of that.