McKinsey: Asset managers' profits could fall 30% by 2018

Increased volatility and competition from passives

Asset managers could see profits fall by a third by the end of 2018 as a result of the increasing popularity of passive investing and ongoing market volatility, according to consultancy firm McKinsey.

In its 2016 Asset Management Survey, the company said between 30%-35% of profits earned by investment managers around the globe could be wiped out by 2018, as a result of expected falls in asset class returns, regulatory changes, competitive intensity, and digital behavior. According to the survey, industry growth has slowed this year after global assets under management reached a record €61trn in 2015, with net flows into European asset managers in Q1 2016 falling to their lowest levels since 'disaster' year 2008. Europe's fund groups saw €16bn of outflows in Q1 as a result of global...