In our next post on the health of the Swiss asset management industry, we see that the industry is growing revenues despite falling management fee rates:
AuM margin (the management fees received from AuM) is declining in all regions (-3.2% p.a. globally).
Yet growth in AuM (see our previous posts: 'Swiss Asset Management Health' and 'Swiss Asset Management has a Unique Story') means that managers have still been able to grow revenue (2.5% p.a. globally).
AuM margin exhibits decreasing returns to scale!
AuM Margins are Declining Globally…
AuM margin is declining in all regions.
Swiss asset managers have prevented their margins from dropping as fast as North American managers or to as low as European.
Can Swiss AuM margin remain high under global competition?
…and AuM Margin Decreases with Scale!
Bigger is not better. AuM margin decreases with time AND WITH SCALE!
Moving to the next AuM segment means tougher competition and more savvy clients.
Revenue: Between AuM Growth and Margin Decline
The result may surprise: Swiss managers’ revenue has grown almost as much as that of North American managers.
The slower decline in Swiss AuM margin compared to North American has counteracted the slower AuM growth.
European managers’ revenue lags due to lower AuM growth.
Amongst Swiss managers the contribution to revenue growth is not equal ...to be continued...
Is this the reality for all managers? We think not: the big picture consists of both winners and losers. Stay tuned. 📺
Big thanks to The Good Guys Company (TGGC) for innovative product ideas.
Download the full report "Swiss Asset Management on the Global Stage".
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