The US asset management industry is the largest in the world, with assets under management totaling $51.9 trillion as of Q3 2022. The industry is highly competitive, with the top 10 firms accounting for nearly 60% of the market share.
There are several notable trends in the US asset management industry. One significant trend is the growing interest in sustainable and socially responsible investing, with Environmental, Social, and Governance (ESG) investing becoming increasingly popular. Another trend is the rise of passive investing, with investors increasingly opting for low-cost index funds and exchange-traded funds (ETFs) over actively managed funds. Additionally, there is a trend towards technology-driven investing, with the use of artificial intelligence and machine learning becoming more prevalent in the industry.
However, there is also an anti-ESG movement that has emerged in the US, with some investors and policymakers pushing back against ESG investing and questioning its efficacy. This movement argues that ESG investing sacrifices returns in favor of social and environmental goals, and that the industry lacks standardization and transparency.
The distribution of asset management products in the US is mainly through financial advisors and brokers. Many asset managers distribute their products through wirehouses, such as Morgan Stanley and Merrill Lynch, as well as independent broker-dealers. There has also been an increase in direct-to-consumer channels, as investors have become more comfortable with digital platforms.
One of the biggest challenges facing the US asset management industry is fee pressure. As passive investing continues to gain popularity, investors are increasingly unwilling to pay high fees for actively managed funds. This has led to a fee war among asset managers, with many firms cutting fees in order to remain competitive.
Another challenge facing the industry is regulatory uncertainty. The Securities and Exchange Commission (SEC) has been working to modernize its regulatory framework, but it remains to be seen how these changes will impact the industry. Finally, the rise of technology has also brought new risks and challenges, such as cybersecurity threats and the need to adapt to new digital platforms.
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