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Wednesday, July 24, 2019

What Will This Biz Look Like In Six Years?

Reported by Neil Anderson, Managing Editor

Over the next six years, mutual fund industry growth will slow, passive and titan marketshare will continue to rise, and fees will continue to fall, at least according to the folks over at PwC. And they see lots of consolidation coming.

Peter Finnerty
U.S. Mutual Funds Leaders
Today the PwC financial services institute released an 18-page report on what the U.S. mutual fund industry will look like in 2025. The report — "Mutual fund outlook: The time to act is now" — offers up a host of predictions about the business.

On the AUM side, the PwC team expects growth for 2018-2025 to slow to 5.6 percent annually (from 8.7 percent annually from 2011-2018). They also expect passive funds to rise to 50 percent of AUM in 2025, up from 36 percent in 2018; "mega managers," they add, will hold 64 percent of 2025 AUM, up from 55 percent at the end of last year.

As for consolidation, the PwC folks predict that 20 percent of current U.S. mutual fund firms will disappear (via acquisition or otherwise) by 2025; they also expect a 14-percent net reduction in the number of mutual funds and ETFs in the marketplace.

The report features remarks from several PwC bigwigs, including: Peter Finnerty, U.S. mutual fund leader; Tom Holly, U.S. asset & wealth management leader; Tracey Keevan, U.S. mutual fund tax technology leader; and Beth Savino, U.S. ETF practice leader. In addition to prediction, they also offer suggestions for fundsters looking to prepare for the coming industry changes.

"Mutual fund firms must act today to remain competitive and relevant in the future," Holly states. 

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