Capital Group CEO sees more M&A coming for active asset managers
The world’s biggest active fund manager aims to drive consolidation, targeting 20% of US active fund share by 2036
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[SINGAPORE] The global asset management industry is poised for more consolidation as active funds react to being squeezed by passive investment products, according to Capital Group chief executive officer Mike Gitlin.
“Last year was the most amount of deals you’ve seen in the asset management industry in 45 years,” Gitlin said during a fireside chat at Capital Group’s Singapore office on Wednesday (Apr 22). “That is going to be a persistent theme.”
After years of seeing clients shift money to index-tracking vehicles with lower fees, active asset managers are embracing acquisitions to get a step ahead. They include Nuveen buying Schroders in a £9.9 billion (S$17 billion) deal, and the recent take-private of Janus Henderson Group by Trian Fund Management and General Catalyst, ending a bidding war with Victory Capital.
In a January report, Bloomberg Intelligence said that the previous 12 months had included 1,612 asset management deals covering North America and Western Europe, either launched or concluded.
Los Angeles-based Capital Group – the world’s biggest active fund manager – has no acquisition plans itself, Gitlin said. The firm, which manages more than US$3 trillion, will still drive consolidation though by growing its market share to more than 20 per cent of active exchange-traded and mutual funds in the US in the next five to 10 years, up from 17 per cent now, he said.
Post-consolidation, there will be room for the largest managers at one end of the spectrum and, at the other, “small, niche providers who can do something exceptionally well and stay focused on what they’re doing,” Gitlin said.
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“What gets hollowed out is the middle” as “the number of active managers our clients use is going to shrink,” he said. “The days of our clients using 100, 200 active managers are over.” BLOOMBERG
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