Global assets under management, as well as pressure on profit margins, will continue to grow for the foreseeable future. Meanwhile, fee pressure will continue as firms around the world seek to add new markets, product offerings and investment capabilities, according to a report by Cerulli Associates.

The report, "Global Markets 2019: Bringing Clarity to an Uncertain World," noted that the fast pace of digitalization is forcing many managers to make greater use of artificial intelligence, machine learning and big data to provide services to clients. Also, advances in robo-advice and passive investing continue to reshape the fund management landscape, widening access to investment services, the report said.

The report also pointed out that asset management and global industry players will pay more attention to China, India and Latin America because the influence of societal change is increasingly being felt.

Cerulli forecasts suggest that equity and bond funds will gradually lose market share to alternative and balanced funds over the next five years. In Asia, investors continue to demand income, diversification, capital protection and low volatility. Distributors in the region want managers to offer structured products from mutual funds, retirement funds, low- cost multi-asset funds, and funds of exchange-traded funds.

In Europe, product development and promotion is focused on fixed income in all the countries Cerulli covers, except the United Kingdom. Of the top 35 strategies being promoted by cross-border managers, 24 are in fixed-income, four are in equity, and three are in multi-asset, the report said.

As for the U.S. retail sector, aging investor demographics are leading to an increased focus on protecting gains that have accumulated during the near-decade-long U.S. equity bull market. In addition, the report said U.S. managers are recognizing that solutions developed for the institutional channel, such as pension liability matching, can be leveraged for retail clients.

In China, third-party online platforms have the highest number of new money market fund accounts of any distribution channel, with most of these new accounts belonging to Millennials, who are becoming a driving force in the country’s wealth management market, the report said.

Regulatory support, a young tech-savvy population and the growing number of smartphones in India are driving online fund distribution. Captive distribution’s market share decreased across Europe, it added.

A key trend in all of the regions covered in the report is the rise of environmental, social, and governance (ESG) investing. Across Europe, responsible investing is increasing for all institutional investors, with pension schemes generally more advanced than insurance companies, but momentum is gaining at a different pace in each country.

The report said among pension schemes, asset managers cite ESG integration as the most popular approach to responsible investing in all markets surveyed, except in Germany, where exclusions are more popular.

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