Global AUM hit a record $128 trillion in 2024. The industry is projected to add another $9.6 trillion by 2035. Those are impressive numbers, and they deserve to be taken seriously, but not at face value.
For EXANTE's latest Asset Management Outlook, I synthesised research from BCG, McKinsey, Deloitte, Accenture, Moody's, and others to understand what's actually happening beneath the surface. The picture that emerged is more nuanced than the headlines suggest. This is not an industry in decline. It is, however, an industry where the gap between the well-positioned and the rest is widening faster than most people appreciate.
Here's what stood out.
1. The margin squeeze in the middle is worse than you think
Oliver Wyman's numbers deserve more attention than they've received. Firms above $2 trillion in AUM run margins of roughly 45%. Below $500 billion, it's 36%. But the mid-sized cohort, caught between the advantages of scale and the pricing power of specialism, sit at just 26%. They're too diversified to command a boutique premium, but lack the infrastructure to compete with the largest platforms. That's not a comfortable place to build a long-term business.
2. The fee war is over — and it's time to move on
Passive funds charge up to 60% less than active equivalents, and the Morningstar data on long-term active underperformance hasn't changed direction. That battle is settled. What's more interesting is where the opportunity has shifted. McKinsey's research shows specialist buyout funds delivering pooled IRRs of around 17%, against 13% for generalists. The market is still willing to pay (generously) for a demonstrable, high-conviction edge. It just won't tolerate mediocre active management dressed up as something it isn't.
3. Geopolitical risk is no longer cyclical
The disruption of the Strait of Hormuz, carrying roughly 20% of global daily oil supply, has created the largest oil-supply shock the market has ever seen. But the point isn't the shock itself. It's what it reveals about the structural landscape: alliances are being permanently redrawn, multilateral coordination is weakening and geoeconomic fragmentation is reshaping cross-border investment flows in ways that won't simply revert when tensions ease. Asset managers whose risk frameworks still treat geopolitics as a temporary input rather than a persistent condition are working with an incomplete map.
4. AI is delivering value — where the groundwork has been done
The conversation about AI in asset management has matured considerably. Front-office applications in market research, sentiment analysis, and client risk profiling are producing real results. Back-office compliance such as fraud detection and sanctions screening, is another area of tangible progress. But there's an uncomfortable pattern: firms that rushed to deploy AI on top of unreformed legacy systems are finding that productivity gains get stuck there. The firms extracting measurable P&L impact invested first in harmonised data and cloud-native infrastructure. That sequencing turns out to matter quite a lot.
5. Cyber risk has become a strategic issue, not a technical one
This is the section of our report that gave me the most pause. AI has simultaneously become the most powerful defensive tool and the most potent offensive weapon in the cyber landscape. The Financial Stability Board has raised a legitimate concern: as the industry converges on similar AI architectures and training data, it is creating correlated systemic risk that could amplify rather than contain market stress. More than half of global asset managers have upgraded their cybersecurity frameworks. While that’s undeniable progress, given the pace of AI development, the other half need to ask themselves some hard questions.
6. Tokenisation has crossed a threshold
Tokenised real-world assets are projected to pass $100 billion in 2026, roughly tripling from recent levels. US regulatory clarity through the GENIUS Act and the Digital Asset Market Clarity Act is giving institutional managers the confidence to launch tokenised funds and explore blockchain-based settlement. This is no longer speculative. It's infrastructure: faster settlement, lower launch costs, fractionalised access and round-the-clock trading. The practical case has overtaken the ideological debate.
7. ESG is maturing and that's a good thing
The political noise around ESG, particularly in the US, has obscured a more substantive evolution. Demand from younger investor cohorts remains strong and is growing. Asia-Pacific, projected to be the fastest-growing region at a 6.8% CAGR, is leading, with 64% of APAC managers planning new sustainable product launches this year. More importantly, the conversation has shifted from simply investing in "green" companies to the harder, more valuable work of decarbonising high-emitting ones. That's where the real alpha, and the real impact, lies.
Where this leaves us
Private markets are expected to generate over half the industry's total revenue by 2030, producing roughly four times the profit per billion in AUM compared to traditional managers. M&A deal value among top alternative managers hit its highest level since 2006 last year. The direction of travel is clear.
The firms best positioned for what's coming are those treating AI as core strategy rather than a technology initiative, building operational resilience as a board-level discipline, embracing tokenisation as infrastructure and accepting that geopolitical complexity is now a permanent feature of the operating environment.
None of this requires panic. It does require transparency, conviction, and a willingness to make definitive structural choices rather than incremental ones.
About Renée
Dr Renée Friedman is Global Head of Research at EXANTE, where she leads analysis on geopolitics, macroeconomics, and public market capital trends. A former Managing Editor at the Economist Intelligence Unit and fund manager in the City of London, she has advised institutions from the UK Parliament to the UNDP. She holds a PhD in Economics from London Business School.
Subscribe to her team’s research here: exante.eu/subscription
This article draws on findings from the EXANTE Asset Management Outlook: Moving Beyond Volatility report available for download here.
Disclaimer and Risk Warning: The information contained herein is provided for informational purposes only and should not be regarded as an offer or solicitation of an offer to buy or sell any investments or related services that may be referenced here. Investing involves a high level of risk. Past performance is not a reliable indicator of future results
