Bain: Traditional asset managers must tap into private markets to avoid wipeout

As public market profits plummet

Traditional asset managers must step up their expansion into private markets to avoid being wiped out as profitability of public market investments plummets, consultancy giant Bain & Co has said.

The firm found there has been a significant compression in profit margins for traditional asset managers, with the average profit per assets under management declining sharply from 15 basis points in 2007 to just 8 basis points in 2022. Many firms have also lowered management fees, leading to a 4% decrease in median revenue from 2021 to 2022, according to Casey Quirk. This decline in profitability is forcing managers to tap into alternative revenue streams, Bain said.  "Wealth and asset managers are now favouring private markets because the business models that have dominated asset ma...