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1、 Getty Images Financial Services Practice Everything everywhere all at once:North American asset management 2023 November 2023 Everything everywhere all at once:North American asset management 2023 November 2023 Contents Introduction 2 1.State of the industry:Down but not quite out 4 2.An increasing
2、 wedge between the industrys haves and have-nots 8 3.Drivers of the widening performance gap 10 4.Structural adjustments and once-in-a-generation opportunities 15 5.An agenda for navigating this new environment 22 1 Everything everywhere all at once:North American asset management 2023 Introduction
3、The asset management industry has been hit by a series of shocks over the past 18 months.Surging inflation and interest rates were the defining disruptions,compounded by a market downturn,banking turmoil,and geopolitical upheaval.Inflation reached a peak not seen in four decades,accompanied by the s
4、wiftest escalation of interest rates in over half a century,marking a sharp departure from the expectations of lower-for-longer rates that had become embedded in the operating assumptions of many market participants.Equity and bond markets suffered simultaneous declines in 2022,with the S&P 500 down
5、 nearly 20 percent and the Bloomberg US Aggregate Bond Index experiencing the worst year of performance since its inception in 1976.This market downturn,unmatched since the financial crisis of 2008,erased close to 50 percent of the cumulative market appreciation from the preceding five years.Even to
6、day,markets continue to wobble as investors place bets on whether the United States is headed for a recession or a soft landing.This market backdrop was further clouded by instability in the banking system,with repercussions in both the US and Europe.The global landscape was also roiled by geopoliti
7、cal disruptions including the war in Ukraine,conflict in the Middle East,intensifying tech rivalries,and the disentanglement of highly connected supply chains.Asset managers have had to parse this complex mosaic of mixed signals.Our 2023 review of the North American asset management industry,includi
8、ng traditional and alternative asset managers,explores five major themes in this challenging environment:1.The industry is down but not quite out,with aggregate industry economics holding up relatively well despite the challenging environment,particularly when compared with prior crises.2.Market str
9、esses have accelerated long-term shifts in industry structure(such as active versus passive,the rise of platform business models,and the adoption of new investment vehicles),widening the gap in performance between leading and laggard firms and narrowing the path to success for industry leadership.3.
10、The industry faces a period of structural adjustment to the new reality of a higher-for-longer interest rate environment,which is upending business models that feature high leverage,complex liabilities,or significant liquidity and duration mismatches.4.This structural adjustment creates an unprecede
11、nted money-in-motion opportunity for asset managers to expand their roles as financial intermediaries:assets and liabilities are gravitating beyond the balance sheet into the world of capital markets and professionally managed assets.5.Asset managers need a trifocal agenda of growth,operating effect
12、iveness,and productivity,simultaneously repositioning their firms to capture the tailwinds of new growth while retooling their operating models to deliver capabilities with customization and scale.Everything everywhere all at once:North American asset management 2023 2 This report delves into detail
13、ed industry data and analysis illustrating and illuminating key aspects of these five themes.We start by reviewing the asset management sectors performance in 2022,then explore what has changed in 2023.Next,we document the increasing performance gap between the industrys leaders and laggards.In the
14、following section,we detail the drivers of this widening gap.Then we explore the once-in-a-generation opportunities presented by the significant structural changes the industry has experienced.Finally,we present our agenda for navigating this challenging new environment.3 Everything everywhere all a
15、t once:North American asset management 2023 State of the industry:Down but not quite out In an industry that had enjoyed a decade of nearly unbroken growth,2022 marked an unusual year of significant contraction.Global assets under management(AUM)declined by 10 percent as markets surrendered a substa
16、ntial portion of their pandemic-era gains.Net flows slowed to a crawl and clocked in at near zero in every region apart from AsiaPacific.Total global net flows registered 1.1 percent,in stark contrast to the norm of 3 to 4 percent during the past decade(Exhibit 1).Exhibit 1 The global asset manageme
17、nt industry had a challenging year in 2022.Global third-party assets under management,$trillion 2013 2014 2017 20182015 2016 2019 2020 2021 2022 61 66 84 83 69 74 96 107 121 109 2.4 3.0 2.3 7.2 1.8 2.7 2.4 0.3 2.1 3.2 2.9 10.0 3.4 7.8 4.8 9.2 1.3 13.5 Change due to market performance,$trillion Chang
18、e due to net flows,$trillion Net flows,%of beginning-of-year AUM 1.14.53.63.62.23.13.03.64.0 1Includes 42 countries from Africa,AsiaPacific,Europe,Latin America,Middle East,and North America.Source:McKinsey Performance Lens Global Growth Cube Everything everywhere all at once:North American asset ma
19、nagement 2023 4 A hit to revenues The economic impact of this contraction was significant,with industry revenues for asset managers based in North America experiencing an 11 percent decline.Profitability also suffered,with a five-percentage-point fall in operating margins(Exhibit 2).Exhibit 2 Indust
20、ry profit margins fell in 2022,mainly because of declining revenue,though the hit was less severe than during the 2008 financial crisis.Estimated pretax operating profit margin,%of net revenue Estimated industry revenues,$billion Estimated industry costs,$billion 2008 2018 2019 2020 2021 20222009 24
21、 33 37 35 37 39 34 9 pp 5 pp 11%3%24%14%2008 2018 2019 2020 2021 2022 120 131 139 155 151 2009 71 62 106 190 200 222 256 228 80 1Weighted average of pretax operating profit margins by revenues of firms in survey sample.Source:McKinsey Performance Lens Global Asset Management Survey;public filings Ho
22、wever,this hit to industry profitability was only about half the wallop that the industry took during the 2008 global financial crisis,and the resulting industry operating margins of 34 percent were a return to pre-pandemic(that is,2019)levels.Taking this longer-term view,the declines of 2022 were m
23、ore akin to a reversion to the mean than a wholesale restructuring of industry profitability.Inflexible costs Profit-margin declines reflected an inflexible cost structure in the face of falling revenue.In the pandemic era of 201921,the asset management industrys cost base grew by$24 billion,or 19 p
24、ercent.Yet in the face of a significant revenue shock in 2022,that cost base contracted by just$4 billion,or 3 percent,attributable mainly to the automatic stabilizers of lower variable compensation for investment management and distribution professionals(Exhibit 3).The industrys cost-cutting measur
25、es announced in the first half of 2023 are expected to result in additional savings of a few billion dollarsmodest when compared with the industrys$151 billion cost base in 2022.Everything everywhere all at once:North American asset management 2023 5 Exhibit 3 Industry costs fell modestly in 2022,he
26、lped by lower investment management and distribution expenses.Estimated total North American asset manager spending by function,$billion 29 29 27 26 28 Legal/risk/compliance Overhead/other Operations Management/administration Technology Distribution Investment management 4 3 0 4 5 6 Cost/AUM 2 2018
27、2019 2020 2021 2022 41 43 49 56 53 8 10 10 12 12120 131 139 155 Change 202122,%151 Total 3 5 6 6 7 7 14 16 15 16 16 13 13 14 16 15 17 18 20 23 24 22 25 25 27 25 1Total annual costs divided by average assets under management during the year,in basis points.Source:McKinsey Performance Lens Global Asse
28、t Management Survey A low-margin recovery While the first half of 2023 showed some signs of optimism,with positive net flows across many asset classes,what has emerged so far is a lower-margin recovery.Clients have been reentering the market in lower-fee passive and fixed-income strategies,while hig
29、her-fee active equity strategies are again in outflows,and private markets fundraising has pulled back(Exhibit 4).Notably,active equity had estimated outflows of$202 billion during the first half of 2023,representing a 2 percent decline of assets under management since the beginning of the year.Priv
30、ate markets fundraising is on track to fall by nearly$300 billion,or about 30 percent,from a 2021 peak.1 1 Comparing annualized first-half 2023 fundraising with 2021.Everything everywhere all at once:North American asset management 2023 6 Exhibit 4 Some asset classes showed signs of a muted recovery
31、 in the first half of 2023.US net flows by asset class,$billion Equities Fixed income Multi-asset 2021 Private alternatives Active ActivePassive Passive 356 422404 202 392 412 331 100 324 127 337 267 192 96 50 162 59 292 159 118 843 584 828 139 2022 H1 2023 estimate H2 2023(annualized)1Private alter
32、natives annual fundraising for North America.Source:McKinsey Performance Lens Global Growth Cube;Preqin This somewhat tentative view of a recovery is reflected in market valuations for asset managers.The industrys forward price-to-earnings(P/E)ratios remain subdued relative to the broader equity mar
33、kets recovery.Traditional asset managers have recorded a decline of more than 25 percent in their P/E ratios,from an average of 16 times in 201518 to 12 times in 202223.The valuations of high-flying alternatives managers have experienced a similar trend,with P/E ratios dropping from an average of 15
34、 times in 201518 to 13 times in 202223,a decrease of more than 10 percent.Everything everywhere all at once:North American asset management 2023 7 An increasing wedge between the industrys haves and have-nots Market volatility has also had an impact on industry structure.This is reflected in a growi
35、ng gap between the industrys best and the rest in terms of organic growth and profitability.Fewer strong performers To compare the performance of US asset managers in terms of organic growth,we measured each firms net flows in 2022 and the first half of 2023,then compared these results with correspo
36、nding measures taken one year earlier(Exhibit 5).Of the asset managers measured this time,29 percent were in the quadrant of consistent winnersfirms that generated positive net flows during both 2022 and the first half of 2023.This share represents a decline from 34 percent one year earlier.The late
37、st crop of consistent winners collectively contributed$600 billion in long-term net flows over the 18-month period ended in June 2023.Firms in this category tended on average to be larger,to have a full breadth of passive and active asset management capabilities,and to have some form of privileged a
38、ccess to distribution channels.Exhibit 5 Evolving industry dynamics are resulting in fewer winners and more challenged firms.US asset managers by net flow performance category,$million Share by performance category,%1,000800 600 400 200 2000 400 600 800 1,000 1,000 800 600 400 200 0 200 400 600 800
39、1,000 Net outflows Net inflows Net inflows Net outflows H1 2023 flows 2022 flows B A A D C C B D Consistent winners Challenged Hitting a bump in the road Rebounders 34 29 2022 H1 2023 2022 H1 2023 2022 H1 2023 2022 H1 2023 30 16 30 42 7 13 1Includes mutual funds and exchange-traded funds.Excludes mo
40、ney market funds and funds of funds.Sample of about 700 fund families listed on Morningstar.2Categories based on flows over time;for example,2023 consistent winners had inflows in both 2022 and H1 2023,while 2022 consistent winners had inflows in both 2021 and 2022.Numbers may not sum to 100%due to
41、rounding.Source:2023 Morningstar.All Rights Reserved.The information contained herein:(1)may not be copied or distributed;and(2)is not warranted to be accurate,complete or timely;McKinsey analysisEverything everywhere all at once:North American asset management 2023 8 In contrast,the share of challe
42、nged firmsthose that experienced net outflows in both 2022 and the first half of 2023increased to 42 percent from 30 percent in 202122.Firms in this segment tended to be smaller and concentrated in investment strategies grappling with pronounced multiyear outflowsnotably,active equities.Collectively
43、,these firms have witnessed outflows amounting to around$800 billion over the 18 months ended in June 2023.We also saw an upsurge in the number of firms we call rebounders,which transitioned from net outflows to net inflows.This resurgence has been driven by performance improvements among fixed-inco
44、me-focused firms that faced net outflows in 2022.Meanwhile,the fourth subset of firms,which we describe as hitting a bump in the road,experienced the inverse journeyshifting from positive to negative net flows.This often came in response to performance challenges encountered by a subset of firms,esp
45、ecially value-oriented active equity managers.A widening gap in profitability In terms of profitability,the gap between the margins of top-and bottom-quartile performers in our Global Asset Management Survey has grown from 37 percentage points in 2021 to 43 percentage points in 2022(Exhibit 6).Top p
46、erformers were able to hold their ground in a stressed environment,while those at the bottom faced significant revenue contractions and had difficulty reducing costs.Exhibit 6 The profitability gap between top and bottom performers has grown.Performance of North American asset managers by quartile P
47、retax operating profit margin,%of net revenue Revenue change,%Cost change,%2022 2021 2020 Top quartile Average Bottom quartile Top quartile Average Bottom quartile Top quartile Average Bottom quartile 50 31 11 17 6 2 6 6 18 53 35 16 24 15 5 3 12 23 50 31 7 1 9 21 11 3 4 43 pp 37 pp 39 pp 22 pp 29 pp
48、 19 pp 15 pp 20 pp 24 pp 1Differences indicated in each graph compare the top-quartile asset managers against those in the bottom quartile,measured in percentage points(pp).2Arithmetic average of pretax operating profit margins of firms in the survey sample.Source:McKinsey Performance Lens Global As
49、set Management Survey Everything everywhere all at once:North American asset management 2023 9 Drivers of the widening performance gap The market stresses experienced by asset managers have contributed to widening the performance gap between leaders and laggards over the past 18 months.What explains
50、 this trend?Our research suggests four major drivers:a difficult environment for active management,customer adoption of new investment vehicles,growth of platform-based business models,and differences in the effectiveness of firms operating models.Continued challenges in active management Structural
51、 outflows in active management offerings,particularly in equities,have exerted a drag on growth for many firms focused on these strategies.While there was talk of a“new age for active”in a higher-volatility environment,the uptick in performance of active value strategies in 2022 has thus far been re
52、latively short lived;many active strategies have been underperforming in 2023(Exhibit 7).In terms of flows,although some growth-oriented active equity strategies experienced improving performance in the first half of 2023,open-end funds recorded outflows of$140 billion in active equities during that
53、 period.Over that same period,active fixed-income funds had inflows of$18 billion(0.1 percent of beginning-of-year assets),while passive fixed-income funds had inflows of$136 billion(7 percent of beginning-of-year assets).Exhibit 7 Active equity and fixed-income funds performance has returned to mor
54、e familiar patterns after a departure in 2022.AUM in each investment style category outperforming primary prospectus benchmark,%64 33 024 2549 5074 75 36 82 81 81 97 43 Growth Blend Value Intermediate Municipal Short Long Active equity Active fixed income High yield 2023 August 20 81 88 43 21 36 59
55、47 2022 22 36 63 88 79 87 74 69 2021 77 26 44 87 44 70 90 19 2020 1Results aggregated at the investment-style level;2023 data through Aug 31.Source:2023 Morningstar.All Rights Reserved.The information contained herein:(1)may not be copied or distributed;and(2)is not warranted to be accurate,complete
56、 or timely;Morningstar Active-Passive Barometer 2020;McKinsey analysisEverything everywhere all at once:North American asset management 2023 10 Over the past decade,as active managers have faced challenges in attracting inflows for their funds,some have been comforted by the belief that above averag
57、e performance and/or low fees could still garner positive net flows.However,in our latest review of active strategies by investment performance and pricing deciles from January 2021 to June 2023,we found that only a small share of active equity funds were able to achieve positive net flows(Exhibit 8
58、).These tended to be funds with top-decile performance,and even in that category,not all experienced positive net flows,suggesting an increasingly narrow path to success.Active fixed-income funds performed better overall than active equity funds,but to attract positive net flows,they generally neede
59、d to have investment performance in the top three deciles and/or fees in the bottom two deciles.Exhibit 8 Positive net flows have been difficult to achieve in active management,though somewhat easier in fixed income than in equity.US mutual fund flows,active equity and active fixed income,by investm
60、ent performance and pricing deciles Investment performance decile High High Low Low Pricing decile Investment performance decile High High Low Low Pricing decile Active equity Active fixed income InflowOutflow$1 billion 1Investment performance deciles based on 3-year return performance as of year-en
61、d 2022.Pricing deciles calculated using year-end 2022 total expense ratio.Cumulative flows from Jan 1,2021,to June 30,2023.Performance and pricing compared with peers in the same Morningstar category,excluding funds with insufficient data(n=10,100 equity funds+6,000 fixed-income funds).Source:2023 M
62、orningstar.All Rights Reserved.The information contained herein:(1)may not be copied or distributed;and(2)is not warranted to be accurate,complete or timely;McKinsey analysisAccelerating adoption of new vehicles The industrys accelerating adoption of new vehicles that deliver strategies in more effi
63、cient and flexible ways has created a new lane for growth for active strategies,at the expense of other types of vehicles.Between 2018 and the first half of 2023,actively managed US exchange-traded funds(ETFs),collective investment trusts(CITs),and separately managed accounts(SMAs)together garnered
64、positive net flows of$500 billion(Exhibit 9).Everything everywhere all at once:North American asset management 2023 11 Exhibit 9 North American active equities have experienced big outflows,though certain types of vehicles have fared better.Cumulative flows,$trillion Total active equity,2018H1 2023
65、Active equity vehicles,2018H1 2023 1.2 0.8 0.4 0.0 2018 2019 2020 2021 2022 H1 2023 1.6 Mutual funds 1.56 Collective investment trusts Exchange-traded funds=30%of mutual fund outflows Separately managed accounts 0.07 0.16 0.24 39%19%1Excludes passively managed funds based on“index”keywords in fund n
66、ames.2Includes direct index separate account strategies.Source:2023 Morningstar.All Rights Reserved.The information contained herein:(1)may not be copied or distributed;and(2)is not warranted to be accurate,complete or timely;McKinsey analysisEach type of vehicle has different factors influencing de
67、mand.Tax and liquidity benefits have long made ETFs an attractive vehicle for various investing strategies,both active and passive.Over the past few years,active ETFs have also reached critical mass as large,established active managers have embraced the category either through mutual-fund-to-ETF con
68、versions or new-product launches.The number of active ETFs in the US increased 40 percent over the 18 months ended in June 2023.In the case of SMAs,flows have been propelled by a desire for tax efficiency and,to a certain extent,customization particularly prevalent among high-net-worth clients.This
69、momentum has spurred growth in municipal bond strategies and,notably,within equities through the surge of direct indexing strategies.For CITs,growth has been driven by cost-sensitive defined-contribution retirement plans.In aggregate,the growth of these alternative vehicles has had a material impact
70、 on flows for North American active equity as a whole.Between 2018 and the first half of 2023,the$500 billion in flows into actively managed ETFs,SMAs,and CITs made up for about a third of the$1.6 trillion in mutual fund outflows over that same period.12 Everything everywhere all at once:North Ameri
71、can asset management 2023 Platform-based business models Platform-based business models,long established in the technology sector,have started to take root in the world of asset management and now account for a disproportionate share of growth in the industry.Platform business models allow asset man
72、agers to create deeper(and in some cases direct)relationships with clients,often by extending reach into different parts of the investment management value chain,moving beyond simply creating investment products.Within the asset management ecosystem,we see three distinct types of platforms emerging:
73、1.Client platforms are often firms affiliated with banks,brokerages,or retirement-focused businesses that have proprietary access to large and growing groups of clients,as opposed to stand-alone asset managers that need to gain access to clients through an intermediary.These platforms can offer exis
74、ting clients additional services such as wealth management.2.Enablement platforms include firms that combine more traditional asset management with technology,operations support,and access to outsourced portfolio construction and manager selection capabilities.These platforms serve a broad range of
75、clients across the investment management ecosystem,including smaller wealth managers and other asset managers.3.Asset origination platforms are firms with a unique ability to both originate and manage assets at significant scale across multiple asset classes,often by tapping sources of“permanent cap
76、ital”such as pension or insurance liability assets.Collectively,firms using these models are growing faster than average,registering growth rates ranging from three percentage points to 16 percentage points above the industry-wide AUM growth of 6 percent recorded from 2018 to 2022.Differences in eff
77、ectiveness of asset manager operating models Asset managers operating models also played an important role in driving differences in operating performance,particularly in profitability.Operating models vary widely in scalability and flexibility,and both play a role in effectiveness.Over the years,ou
78、r review of asset managers performance has highlighted that the most important factors correlated with top-quartile profit margins are not absolute size or scale,but rather the size or scale of an investment strategy.Firms that created highly scalable operating platforms with built-in operating leve
79、rage generally proved to be more resilient in their ability to remain profitable in a highly volatile year.Similarly,firms with greater organizational agility were able to pivot and reallocate resources toward areas of growth.Of the firms polled in our North American Asset Management Survey that rep
80、orted declining revenues in 2022,only about 60 percent were able to reduce costs,and of these companies,a majority made cuts of 5 percent or less(Exhibit 10).Asset managers relative positioning vis-vis each of these dimensions has led to significant differences in performance in terms of growth and
81、profitability.Everything everywhere all at once:North American asset management 2023 13 Exhibit 10 Almost 60 percent of firms we surveyed cut costs as revenue fell,though a majority of reductions were modest.Cost changes at North American asset managers with declining revenue,2022,%of respondents So
82、urce:McKinsey Performance Lens Global Asset Management Survey Down by 10%Down by 5%Up by 10%Up by 5-10%Down by 5-10%Cost increasesCost reductions3214Everything everywhere all at once:North American asset management 2023Structural adjustments and once-in-a-generation opportunities While th
83、e stresses of the past year and a half are real,the current period is also creating opportunities for asset managers.The present tumultuous conditions have ushered in not just market volatility,but also significant changes to the foundations of the industry.After a decade or so of easy money,the sec
84、tor confronts the reality of a sustained higher-for-longer interest rate environment,the long-term consequences of interest rate shocks,and greater market volatility.These conditions create stress on nodes of the financial ecosystem that rely on high leverage,wholesale funding,illiquidity,and durati
85、on mismatches.As with any crisis,these stresses can also lead to new ways of doing business.Certain segments of investors are looking for new alternatives as midsize US banks cope with bond market losses,deposit flight,a decrease in lending activity,the preemptive restructuring of potentially impair
86、ed assets,and the potential of increased regulation.Where some banks pull back from parts of the market,opportunities arise for asset managers to play the role of alternative lenders or havens for investors looking for yield.We highlight four opportunities for asset managers arising in this new envi
87、ronment:the increasing attractiveness of cash as an asset class,a repositioning of fixed income,an evolution in private markets,and a reset in commercial real estate.Dash for cash The radical shift in interest rates has made the old quip of“cash is trash”appear outdated.Cash isnt just a safe haven a
88、nymore;it is an asset class with a respectable returninvestors are now quite literally being paid to wait.These factors have triggered record inflows of more than$600 billion into money market funds in the first half of 2023(Exhibit 11).This surge was driven by a combination of the banking deposit c
89、rises and higher yields and was fueled by historically elevated levels of accumulated cash on individual and corporate balance sheets during the pandemic($8 trillion and$3.2 trillion,respectively,as of the first quarter of 2023).Beyond inflows,the business of liquidity has become far more commercial
90、ly attractive as asset managers have been removing fee waivers on money market funds,which were commonplace during periods of low interest rates to keep investors yields from dropping below zero.As a result,we estimate that the revenue pool for money market funds in the United States has more than d
91、oubled over the first eight months of 2023 to about$13 billion,2 not far behind the revenue represented by other large asset classes such as multi-asset funds,estimated at$15 billion.3 Amid the growth in cash as an asset class,the key challenge for asset managers is retaining shorter-term assets tha
92、t have migrated into the industry from the depository system.To broaden their structural role in the liquidity ecosystem,asset managers should consider these steps:Provide cash segmentation services that optimize balances by investment horizon and liquidity needs,as well as laddering across differen
93、t investment instruments(for example,short-duration fixed income)to deliver customized liquidity with superior yields.Offer liquidity solutions tailored to the needs of larger corporate clients(for example,dynamic portfolio management in SMAs)and smaller clients(for example,liquidity-driven bond lad
94、ders).2 Estimate based on comparing US money market funds annual net revenues as of December 31,2022,and August 31,2023,excluding amounts waived because of fee waivers.3 Active and passive multi-asset funds in the US.15 Everything everywhere all at once:North American asset management 2023 Deepen in
95、vestments in technology(and integrations with client-facing cash management technology platforms)to increase the stickiness of their liquidity services.Exhibit 11 Money market funds experienced record inflows in the first half of 2023,helped in part by worries over banks.Monthly flows,money market f
96、unds and commercial bank deposits,$billion 500 400 300 200 100 0 100 200 300 400 May 2022 Jul 2022 Sept 2022 Nov 2022 Jan 2023 Jan 2022 June 2022 Aug 2022 Oct 2022 Dec 2022 Feb 2023 Commercial banking and deposits shockMoney market fundsCommercial bank deposit flows Mar 2023 Apr 2023 Apr 2022 Mar 20
97、22 Feb 2022 Source:Federal Reserve Bank;2023 Morningstar.All Rights Reserved.The information contained herein:(1)may not be copied or distributed;and(2)is not warranted to be accurate,complete or timely.A new future for fixed income Higher interest rates have led to a recalibration of the role of fi
98、xed income in asset allocation.What was once viewed primarily as a low-risk diversifier has become an increasingly attractive source of income,now that risk-free yields sit at roughly 5 percent(Exhibit 12).When combined with long-term trends(for example,the retirement needs of an aging population,de
99、fault asset allocation shifts in target date funds),demand for fixed income is expected to be robust in the coming years.However,fixed income has been changing in three important ways:more use of ETFs,more illiquid credit,and a bigger role for insurance balance sheets and reinsurance-oriented entiti
100、es.Greater use of the ETF wrapper The 2023 recovery of fixed-income flows in the wake of 2022 disruptions mirrors a pattern seen in the past with equities:a macro shock triggers outflows from actively managed strategies,a period of stabilization encourages investors back into the markets,but money t
101、hat was previously on the sidelines flows back into the asset class through passive strategies.Despite the bond market turmoil in 2022,fixed-income ETFs captured$198 billion in new money.Notably,active ETFs within fixed income also surged,growing into a$150 billion AUM segment by mid-2023.Demand for
102、 fixed-income ETF usage will likely keep growing as institutional clients seek the tactical flexibility and cost efficiency of the vehicle and as retail intermediaries continue to embrace the tax efficiency involved and the use of model portfolios(which typically include ETFs).Everything everywhere
103、all at once:North American asset management 2023 16 Exhibit 12 Rising interest rates have made fixed-income assets increasingly attractive.Yields on US instruments,%T-bills(13 months)Treasuries(13 years)Municipal bonds Mortgage-backed securities Investment-grade bonds Asset-backed securities Commerc
104、ial mortgage-backed securities High-yield bonds S&P 500 Money market funds 0.04 0.9 1.1 2.0 2.4 1.1 1.9 4.9 4.2 0.02 5.4 5.4 4.3 5.6 6.0 5.8 6.1 8.9 4.1 5.1 Fixed-income assets 540 450 320 360 370 460 420 400 14 510 Change,Sept 2023 Dec 2021 basis points1Data as of Dec 31,2021,and Sept 29,2023.2Calc
105、ulated as weighted average of money market funds(prime,tax-exempt,government,and Treasury)as of Sept 30.3Numbers may not sum due to rounding.Source:Bloomberg;Nasdaq;SEC money market fund statistics;US Treasury;McKinsey analysisMore illiquid credit Private credit is likely to be a major beneficiary o
106、f recent disruptions.The private credit industry as we know it came of age after the 2008 global financial crisis,when banks pulled back from certain types of lending in response to a new wave of regulation.In a similar way,recent pressure on bank lending activity is likely to set up private credit
107、for the next stage of growth as private direct lenders continue to take market share from broadly syndicated loans that involve a group of lenders.As an example,the share of leveraged buyout transactions financed by private credit increased from about 60 percent in 2019 to about 80 percent in 2022.P
108、rivate lenders have also started to attract larger borrowers,cutting out intermediaries like banks and brokers,with the number of direct lending deals of$1 billion or more totaling about$70 billion in 2022,up from about$5 billion in 2019.4 Meanwhile,client demand remains robust for private credit st
109、rategies,which can achieve higher yields than traditional fixed-income strategies.The floating-rate features of many private credit strategies have provided comfort to clients allocating in a rising-interest-rate environment.As a result,more large institutions have begun to structurally embed illiqu
110、id credit within their asset allocations(that is,via dedicated portfolio allocations to private credit and,in some cases,even with accompanying private credit teams).Large allocators are also seeking to blend private credit allocations with public fixed income,and private credit investments with pri
111、vate equity,as they fine-tune the positioning of their portfolios.4Data from Refinitiv and Pitchbook.17 Everything everywhere all at once:North American asset management 2023 A bigger role for insurance balance sheets and reinsurance entities The higher-for-longer interest rate environment is precip
112、itating a transformation in the funded status of liabilities.In the world of corporate pensions,higher rates have led to marked improvements in how well funded plans are,driving up interest in pension risk transfers and the freezing and annuitization of liabilities.Pension risk transfer volume has n
113、early doubled,from$27 billion in 2020 to$52 billion in 2022.This has been accompanied by the rise of multiple private-capital-backed insurance entities that have been created to aggregate liabilities(through acquisition and new origination)and provide a sizable pool of permanent capital to feed adja
114、cent asset management businesses.As of 2022,insurance entities backed by private capital controlled about 11 percent of US life and annuities reserves,up from about 2 percent in 2012.5 An evolution in private markets The relentless growth of private markets alternatives has undoubtedly been one of t
115、he most important trends reshaping the asset management industry over the past decade.However,macro and market conditions have created a fundraising drought,at least in relative terms.Annualizing first-half fundraising for the remainder of 2023 would result in fundraising figures closer to the rough
116、ly$1.1 trillion raised in 2020 than to the fundraising peak of$1.5 trillion reached in 2021(Exhibit 13).This pause in momentum can be attributed to at least three factors,including disruptions to M&A 5 McKinsey analysis of insurance regulatory data from AM Best.Exhibit 13 Private markets fundraising
117、 is down from a 2021 peak.Global private markets fundraising by asset class,$billion Rate of change,202122,%15 2012 402 2013 534 2014 613 Private equity 2015 710 2016 869 2017 983 2018 1,085 2019 1,204 2020 1,128 2021 1,455 2022 1,356 H1 2023 1,163 581 2023 annualized 17 13 6 211 303 367 385 521 616
118、 680 743 669 844 791 384 37 48 61 72 88 88 106 119 112 143 165 15 90 108 114 144 129 151 163 190 153 228 190 83 64 75 71 109 131 128 136 152 194 240 210 99 7 Real estate Private debt Infrastructure 1All closed-end funds.Private markets refers to infrastructure,private debt,private equity,real estate
119、 private equity and debt,and natural resources.Secondaries and funds of funds are excluded to avoid double counting of capital raised.Source:Preqin data compiled as of July 2023;McKinsey analysis Everything everywhere all at once:North American asset management 2023 18 and IPO markets that have hamp
120、ered exits and reduced distributions available for reinvestment;the impact of the denominator effect,where sharp markdowns of public asset valuations have created relative overallocation to private markets in the short term;and valuation uncertainties in key sub-asset classes such as venture capital
121、 that have spurred investors to take a wait-and-see approach.The fundraising drought has had a disproportionate impact on smaller private managers as megafunds have been increasing their share of fundraising.In the first half of 2023,the top ten private markets funds globally represented 2 percent o
122、f vehicles but accounted for 35 percent of total capital raised.In contrast,larger firms have been weathering the fundraising drought with greater resilience.Amid these challenges,the private markets have continued to innovate.Private markets secondaries,for example,have stepped in to meet a growing
123、 need for liquidity in the market.Global secondary transaction volumes have more than doubled since 2020,to$108 billion in 2022,as limited partners seek to rebalance their portfolios and general partners aim to extend the hold periods for their best assets through continuation vehicles.In the curren
124、t liquidity-constrained environment,the secondaries asset class is coming of age,with approximately$110 billion in transaction volumes in 2022,up from$40 billion in 2015,and eight megafunds with AUM of more than$15 billion each.In addition,the longer-term outlook for private markets demand remains r
125、obust.A recent McKinsey survey of about 300 institutional investors showed that half aim to allocate more to private markets asset classes over a three-year horizon,as opposed to the 35 percent who plan to do so over the next 12 months(Exhibit 14).This optimistic demand projection is bolstered by th
126、e burgeoning high-net-worth segment.A recent McKinsey survey of financial advisors serving high-net-worth individuals indicated that over half intended to allocate more than 10 percent of their eligible client portfolios to private alternatives over the next five years.Exhibit 14 Institutional inves
127、tors expect to allocate more funds to private markets asset classes over the next few years.Expected change in funding to various asset classes,%of respondents Buyout Growth Venture capital Real estate Infrastructure Private debt All asset classes 18 19 27 24 12 14 19 16 11 20 22 12 16 16 45 51 44 3
128、9 58 56 50 29 33 26 27 47 46 35 22Over next 12 months Over next 3 years Decrease Increase 1Excludes respondents who selected“No change”or“Dont know.”Source:McKinsey Limited Partner Survey March 2023(n=276)19 Everything everywhere all at once:North American asset management 2023 This combination of n
129、earer-term challenges and a positive long-term outlook creates a unique window of opportunity for traditional asset managers seeking to enter or expand their presence in private markets investing.Some leading firms are doing this through team lift outs(hiring an entire team from another company),par
130、tnerships,or corporate acquisitions.A reset in real estate Commercial real estate(CRE)has quickly emerged as one of the most talked-about sub-asset classes in the industry,given the intersection of massive shifts in usage patterns postCOVID-19 and financial tightening on highly leveraged assetsa com
131、bination that has put pressure on owners and investors alike.Nowhere is this more evident than in the office segment,where valuations have fallen 24 percent in the year ended in July 2023(Exhibit 15).6 The situation is further exacerbated by the looming refinancing cliff of more than$1.2 trillion in
132、 commercial mortgages scheduled for renewal over the next few years,necessitating refinancing at markedly elevated interest rates.Exhibit 15 Some commercial real estate sectors are under pressure,likely to be compounded by the amount of debt maturing in the next few years.Real estate sector Office R
133、etail Industrial Residential 24 9 12 1 3-year growth outlook US REIT returns by sector,1-year trailing,%Total commercial mortgage maturities,$billion 500 600 0 400 100 200 300 700 800 2023 2024 2025 2026 2027 2028 2029 2030 2031 2032 2033+1US real estate investment trust returns for year ended July
134、31,2023.2Residential returns for multifamily only.Source:Greenstreet;Mortgage Bankers Association;McKinsey analysis However,not every real estate sector is cast from the same mold.Macro trends are affecting different sub-asset classes within real estate in very different ways.For instance,industrial
135、 real estate continued to perform robustly,in line with long-standing trends around e-commerce and positive developments including data center growth due to generative AI.Amid these cross-currents,a restructuring is coming for the collective$13.5 trillion US CRE balance sheet.Potential hot spots inc
136、lude regional and community banks(which account for more than 20 percent of real estate lending)that are seeking to moderate their exposure to CRE,and semiliquid fund products that have exposure to impaired asset classes(for example,the$400 billion of assets in open-end core real estate funds,some o
137、f which have redemption queues 6 Based on July 2023 trailing 12-month performance of public real estate investment trusts.Everything everywhere all at once:North American asset management 2023 20 of investors waiting to cash out).This restructuring will create opportunities for providers of patient,
138、or long-term,capital.Specific opportunities for asset managers include the recapitalizing of high-quality assets as banks reduce their exposure to the real estate sector,the scaling of real estate lending as an investable asset class,and the building of next-generation real estate investment franchi
139、ses(such as sustainable buildings and digital infrastructure)while incumbents are on the defense.21 Everything everywhere all at once:North American asset management 2023 We estimate that collectively,these four disruptions represent a potential$5 trillion money-in-motion opportunity over the next f
140、ive years,with the prospect of shifting significant pools of assets into the world of third-party investment management.If asset managers are able to capture these opportunities,they stand to assume a far more expansive role within the capital markets ecosystem.Emerging roles for asset managers incl
141、ude liquidity managers,providers of long-term financing(via alternative credit),creators of new capital market instruments(for example,ETFs but in the future also tokenized assets)that democratize access to the markets,and scaled providers of liability-centric investment management services,such as
142、for corporate defined benefit plans,in concert with insurance-linked permanent capital.An agenda for navigating this new environment The past 18 months have ushered in a new normal for asset managersa sharp departure from the decade that came before.Adjusting to this new structural reality will requ
143、ire a trifocal agenda:coming up with new strategic positioning,reengineering operating models,and upgrading firms execution engines.While the specific actions for each firm will vary,here are some common strategic themes firms should keep in mind.New strategic positioning For leaders of asset manage
144、ment firms,this is an opportune time for repositioning the firm and future-proofing their investment and product platforms.Repositioning the firm Asset managers will need to pressure-test their business strategies against long-term growth trends and a fundamentally different market environment.Firms
145、 with substantial exposure to areas that are challenged in the new environment will need to grapple with how to maximize the value of their legacy business while identifying the best ways to tap into new pockets of growth.As in prior crises,firms that can take advantage of transformative opportuniti
146、esincluding acquisitions,recruiting,and partnerships in the financial ecosystemwill have the opportunity to reposition themselves for outsize growth.Future-proofing the investment and product platform Firms should reexamine their existing product and vehicle strategies in light of a different market
147、 environment.In some cases,this will mean significantly accelerating the pace of product and go-to-market innovation,while in others it will mean more aggressive product rationalization.Firms should also be exploring the unprecedented opportunities created by new technologies such as generative AI t
148、o boost effectiveness and efficiency in investment processes including research,portfolio construction,security selection,trading,and risk management.All firms will have opportunities to improve scale,collaboration,and quality across what are often disparate investment centers.Firms that seize the m
149、oment to modernize their investment platforms can unlock competitive advantages that improve their legacy businesses in ways that preserve meaningful growth.New operating model choices With new choices in operating models,asset managers can design for flexibility and scale,as well as make bold moves
150、 to reallocate resources.Designing for flexibility and scale Firms will need to adapt to the volatility of the new environment by reengineering their operating models to create greater flexiblility and agility.This will require fundamental shifts to the operating spine of the firm to make costs more
151、 malleable so the firm can adapt quickly to changing market conditions.It will also require more fundamental shifts in the way teams are organized and the way work gets done.For example,some firms will find that there are cross-functional teams or tools that can work across asset classes or client s
152、egments to drive greater scale and/or to rapidly direct resources toward high-potential commercial opportunities.Bold resource reallocation Firms will also need to take advantage of this moment of uncertainty to cut back on internal complexity by shifting more resources toward true drivers of growth
153、 and taking a long,hard look at less crucial initiatives.This effort benefits from a recognition that incentives and key performance indicators need to differ for businesses operating at different Everything everywhere all at once:North American asset management 2023 22 speeds.For example,a declinin
154、g,mature book of legacy mutual funds will need different KPIs than a fast-growing but resource-intensive private markets build-out.In some cases,effective resource allocation also involves courageous choices to say no to long-standing businesses in order to make significant investments in new ones.W
155、ell-tuned execution engine As in any initiative,the execution must be as careful as the planning.Two elements where execution is particularly critical for asset managers are distribution and strategic partnerships.Distribution alpha Asset managers will need to modernize the engines that allow them t
156、o multiply the impact of their distribution resources and operations.This includes making sales and marketing a competitive differentiator by using non-traditional data,digital tools,and generative AI for tasks like targeting potential customers more effectively and tailoring marketing outreach to s
157、ignal how a firm meets the distinct needs of different client segments.In the post-pandemic new normal,distribution professionals also need to recalibrate their model for customer interaction to make the most of fewer opportunities for in-person engagement.Leading firms are building digital distribu
158、tion capabilities as well as refreshing client coverage to optimize across traditional,hybrid,expertise-driven,and team-based models.Firms that get this new distribution model right stand to win.For example,our annual Financial Advisor Client Experience Survey of more than 3,000 financial advisors s
159、hows that firms effectively using virtual channels to share expertise from portfolio managers and product specialists have meaningfully higher customer satisfaction scores.Strategic partner engagement Firms that win in this new environment will find ways to be strategic partnersrather than pure prod
160、uct providersto their best clients.Strategic partnerships will also extend to a broader set of financial market participants,including some of the influential platform businesses we mentioned earlier,along with players in adjacent spaces(such as permanent-capital-oriented partnerships with insurance
161、 companies and distribution partnerships with private markets firms).Firms interested in pursuing these types of opportunities will need dedicated resources focused on strategic partnerships,including time and attention from the C-suite.Everything everywhere all at once:North American asset manageme
162、nt 2023 23 Beneath the challenges that asset managers experienced this year lies significant opportunity.As the financial markets ecosystem undergoes a once-in-a-generation transformation,asset managers have the potential to play a bigger role in the world of finance while helping meet clients needs
163、 in an increasingly uncertain environment.Farhan Banani is an associate partner in McKinseys Chicago office,and Ju-Hon Kwek is a senior partner in the New York office,where Joseph Lai is a partner and Henri Torbey is an associate partner.The authors wish to thank Isha Aggarwal,Mannat Bakshi,Carlos B
164、eltran,Edgardo Bonilla,Manraj Singh Dhillon,Sebastian Goumashvili,Lucia Guardia,Owen Jones,Aleesha Melwani,and Victoria Nguyen for their contributions to this report.This report was edited by Jana Zabkova,a senior editor in the New York office.Copyright 2023 McKinsey&Company.All rights reserved.24 F
165、ind more content like this on the McKinsey Insights AppScanDownloadPersonalizeScan Download PersonalizeFind more content like this on the McKinsey Insights AppMcKinsey Financial Services Practice November 2023Copyright 2023 McKinsey&Company Designed by Darby McKinsey McKinsey Confidential and proprietary.Any use of this material without specific permission of McKinsey&Company is strictly prohibited.