Portfolio Management in the US Industry Market Research Report From IBISWorld Has Been Updated
Los Angeles, CA (PRWEB) July 29, 2013 -- The Portfolio Management industry has been on a rollercoaster ride during the past five years because its revenue strongly correlates with the performance of global capital markets. Industry firms generate revenue from fees, calculated as a specific annual fee multiplied by total assets under management (AUM). “The unprecedented severity of the worldwide financial crisis and subsequent recession in 2008 and 2009, followed by the slow recovery through 2013, have made industry revenue volatile,” says IBISWorld industry analyst Doug Kelly. Meanwhile, industry profit has declined due to increased competition placing downward pressure on fees.
Over the five years to 2013, revenue for the Portfolio Management industry is expected to decline an average of 0.8% per year to total $180.1 billion, despite a projected 2.2% jump in 2013. This meager annualized rate of decline masks the volatility that occurred over the past five years. Revenue declined significantly in 2009 as the subprime crisis sent asset prices on a downward spiral, which caused industry AUM to decrease. In 2010, industry revenue started to recover, but high investor uncertainty caused revenue to decline slightly in 2011. “Revenue has since returned to growth due to growing demand for professional investment services, improving capital markets and declining expenses,” says Kelly. Profit, on the other hand, has experienced steady declines, as competition from passively managed exchange-traded funds has put pressure on portfolio managers to lower fees.
There are a large number of firms that operate in the Portfolio Management industry. A company's dominance in the industry is measured by how much revenue it generates and its value of AUM. The largest funds operate globally and generate fee revenue from clients that are inside and outside of the United States. Market share concentration is low, and there are few true major players in the industry, although BlackRock Inc. obtained a significant market share through its acquisition of Barclays Global Investors in 2009 a. In total, the largest share of business for the top four firms comes from acting as sponsors and managers of mutual funds. The fees generated from management of mutual funds, particularly for institutional clients and money market mutual funds is low compared with other fund management such as hedge funds and more actively managed funds. Market share concentration is increasing in this industry, however, and the pace of consolidation has accelerated given the difficult investing environment resulting from the global financial crisis. Falling revenue and profit will either cause firms to consolidate or diversify into niche markets to survive.
Over the five years to 2018, IBISWorld projects industry revenue will grow as improved market conditions will push up asset values and investor confidence. Demographic trends are also expected to boost demand for industry services. As baby boomers switch from capital accumulation to preservation in retirement, they will likely seek industry services to manage their nest eggs. Institutional investors will also increase industry AUM as they look to diversify across asset classes to generate returns in a slow-growth US economy. While revenue and profit will strengthen over the next five years, their rate of increase will not likely match prerecession growth. Additionally, financial system regulations are anticipated to tighten in response to the global financial crisis, leading to higher compliance costs and streamlined revenue.
For more information, visit IBISWorld’s Portfolio Management in the US industry report page.
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IBISWorld industry Report Key Topics
The Portfolio Management industry comprises firms that actively manage assets for clients. Portfolio managers have the authority to make investment decisions and generate revenue through fees that are based on service and portfolio performance. Industry operators manage assets for investment vehicles such as mutual funds, hedge funds and variable insurance products.
Industry Performance
Executive Summary
Key External Drivers
Current Performance
Industry Outlook
Industry Life Cycle
Products & Markets
Supply Chain
Products & Services
Major Markets
Globalization & Trade
Business Locations
Competitive Landscape
Market Share Concentration
Key Success Factors
Cost Structure Benchmarks
Barriers to Entry
Major Companies
Operating Conditions
Capital Intensity
Key Statistics
Industry Data
Annual Change
Key Ratios
About IBISWorld Inc.
Recognized as the nation’s most trusted independent source of industry and market research, IBISWorld offers a comprehensive database of unique information and analysis on every US industry. With an extensive online portfolio, valued for its depth and scope, the company equips clients with the insight necessary to make better business decisions. Headquartered in Los Angeles, IBISWorld serves a range of business, professional service and government organizations through more than 10 locations worldwide. For more information, visit http://www.ibisworld.com or call 1-800-330-3772.
Gavin Smith, IBISWorld, 310-866-5042, [email protected]
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