Global Whitepaper: Growing Revenues, Not Assets, New Name of the Game

Historically, assets under management (AUM) have been the yardstick by which fund managers judged themselves. In a business whose revenues come from asset-based fees, AUM should be an effective proxy for what ultimately counts most: Asset managers’ revenue-generating potential.

As a marker of success, however, AUM ain’t what it used to be.

The relationship between assets and the revenues they generate has frayed as fund buyers have paid increasing attention to costs, leading the pendulum to swing toward lower-fee solutions. With assets growing fastest in places where fees are low, new AUM generates less revenue growth than it would have in earlier eras. The proliferation of ETFs has only intensified this dynamic, not just in the United States but also in Europe.

This white paper shows this reality playing out in 2023, with mutual funds and ETFs delivering weak-to-negative revenue growth across geographies. It also depicts active management as the industry’s prime revenue driver—even for many index fund providers—despite rapidly shrinking market share. While arguing active managers need to reckon with a zero-sum future, the paper also details the many paths to potential success.