Asia Pacific experienced an overall growth in assets under management (AUM) of around 19% during 2018 compared with 2017, according to the latest Global 500 research from the Thinking Ahead Institute, part of Willis Towers Watson Investments.
The research found that since 2014, India has led the way in Asia with 22.7% AUM growth followed by China at 21.6%.
“However, to maintain this growth in an ever changing investment environment, Asian asset managers will need to start embracing ESG investing,” Jayne Bok, head of investments, Asia at Willis Towers Watson said in a statement.
Globally, assets managed in ESG mandates by the 500 largest money managers in the world rose by 23.3% in 2018, in contrast to their overall AUM, which were down 3% from the previous year. Assets managed according to ESG principles also increased over the year, by 17.8%.
An underlying purpose, beyond the pursuit of only growth and profit, is identified as a differentiating factor in an overcrowded industry facing a challenging environment, according to the report. Client interest in sustainable investing, including voting, increased across 83% of the firms surveyed.
Bok argued that Asia asset managers should embrace the global trend by creating a culture that enables sustainable investing to flourish.
“This starts at the very top and requires leaders to step up, demonstrate clear values and show the courage and determination to invest in projects that create a better society for all,” she said.
Nevertheless, the last decade has seen an increase in the representation of asset managers from China in the global industry.
In 2018, firms from China had a 2.7% share of global AUM, compared with 0.33% in 2008. In Asia, China asset managers now make up nine of the top 20, compared to just three in 2017, according to the report.
“In Asia, we’re continuing to see the rising contribution of China to the global asset management community, with Chinese representation in both distribution of assets and assets under management increasing,” said Bok.
“This shows how, despite ongoing uncertainties connected to the US-China trade war, more and more investors are now seeing China as an opportunity to diversify their portfolios.”
Meanwhile, BlackRock is still the largest asset manager in the global rankings, a position it has held since 2009. Vanguard and State Street complete the top three for a fifth successive year, and Fidelity and Allianz are placed fourth and fifth respectively.
Sumitomo Mitsui Trust Holdings, Nippon Life Insurance, Mitsubishi UFJ Financial Group and Asset Management One were the only Asian asset managers ranked in the Top 50.