World's top asset managers rebounded to $128T in 2023

The world’s 500 largest asset managers amassed a combined $128 trillion in AUM by the end of 2023, reflecting a 12.5 percent increase over the year, according to new research published by Willis Towers Watson's Thinking Ahead Institute.

The figure marks an impressive revival from the forgettable 2022 carnage that sunk AUM by $18 trillion, though total assets have yet to revisit the levels seen in 2021.

While WTW's report acknowledged renewed interest in private markets, equity and fixed-income still ruled the roost, comprising 77.3 percent of total AUM combined. Breaking it down further, equity holdings accounted for 48.3 percent, with fixed income at 29.0 percent, marking a slight decline from last year as investors shuffled toward alternatives like private equity.

“Asset managers have experienced a year of consolidation and change. While there has been a return to strong market performance, the last year has also seen forces of change,” Jessica Gao, director at the Thinking Ahead Institute, said in a statement. “Macro factors have played a key part in the story, with notable highs in interest rates during 2023 exerting varied pressure on different asset classes, geographies, and investment styles.”

Geographically, North America led the pack with a 15 percent rise in AUM, now representing 60.8 percent of the global total with $77.8 trillion. Europe, including the UK, saw a 12.4 percent increase, while Japan experienced a slight decline of 0.7 percent. US-based managers were overwhelmingly the biggest of the biggest firms, representing 14 of the top 20 while controlling 80.3 percent of assets in that group.

Among the top individual firms, BlackRock remained the largest global asset manager, with AUM exceeding $10 trillion by year-end 2023 – it's rocketed to $11.5 trillion since then – followed by Vanguard at $8.6 trillion. Fidelity Investments and State Street Global held third and fourth positions, with both boasting AUM levels over $4 trillion. 

Marking a new development in the indexing vs. active management showdown, passive investment strategies reached a significant milestone as they swallowed up a 33.7 percent slice of the total AUM pie shared by the largest firms. But that progress could be due for a slowdown as mounting pressures create a demand challenge for the passive space.

“We have continued to see net flows into passive strategies as they continue to offer a compelling value proposition,” Gao noted, “particularly in terms of lower fees and simplicity. Yet growing market volatility and issues with concentration, which typically highlight the need for expertise to outperform benchmarks, may be a source of caution from some allocators.”

The report also highlighted how asset managers, even those at the top of the AUM heap, are under pressure to innovate.

“Investment in technology remains essential not just to maintain a market edge, but also to meet evolving client requirements and expectations,” Gao said, pointing to challenges posed by fee compression, increased competition, and the demand for personalized, tech-driven investment solutions.