Irish asset managing value ‘to hit €7trn’
PWC projects that assets under management in Ireland have the potential to grow to €7trn by 2025, from €4trn last year.
The accountancy giant has conducted a global study of the industry and believes a shift towards areas where Ireland performs well means there are promising prospects for the industry here.
“Shifts in global investment patterns to passive and alternatives, where Ireland punches well above its weight, will further fuel growth in Ireland,” said Olwyn Alexander, PwC global asset and wealth management leader.
“However, with the uncertainties caused by Brexit and other geopolitical challenges, we cannot be complacent. Technology, and particularly the rise of AI and robotics, provides great opportunities to further manage the cost base and deliver even better products to consumers,” she added.
The report projects global assets under management will grow to $145.4trn (€125trn) in 2025 – compared to $84.9trn (€73trn) last year.
It predicts so-called “passive management” to grow to 25pc of global assets under management by 2025.
This is an investment strategy designed to track the performance of a particular market, compared to active management where managers try to beat the market. Active management is seen falling to 60pc from 71pc.
“In the ongoing debate of active versus passive investing we are optimistic for both. While we anticipate a faster pace of growth for passives due to rising allocations, we still predict growth in active investments, which will continue to preserve active management’s dominant market share,” Ms Alexander said.
“It is important to remember that in a rising market, passive returns are very attractive at a low cost but that inevitable market corrections will bring a continued appreciation for the value of active investments.
“Both will be key building blocks in balanced portfolios to meet specific investor outcomes.”
The report projects ”alternative asset classes” – including private property, private equity and private debt – will more than double in size by 2025 to account for 15pc of assets under management. PwC is also predicting that the industry’s involvement in niche areas like peer-to-peer lending and infrastructure will increase substantially. It warns fund managers to be cognisant of developments in technology, and says they should design new products to meet changing needs.
“Machine learning and AI are set to change the way research and portfolio management is conducted and robotic process automation will revolutionise the back and middle office.”
Lloyd Blankfein, chairman and chief executive officer of Goldman Sachs Group. Inset, the Goldman Sachs building under construction in London