Pricewaterhouse Coopers’ (PwC) recent report on the Asset and wealth management landscape in Asia bodes well for the future of the industry. The report that has been titled “Asset and Wealth Management 2025: The Asia Awakening” predicts that the asset and wealth management market in the Asia Pacific region will grow substantially in the coming years and will almost double in size to reach $29.6 trillion by 2025. With an annual compound growth of 8.7%, the market will have reached $16.9 trillion by 2020 from $15.1 trillion two years ago in 2017. However, it also states that the estimated growth to $29.6 trillion by 2025 remains substantially dependent on geopolitical factors as well. If the current wave of protectionism doesn’t spiral out of control, and the international trade landscape is kept stable, the estimated growth can be achieved.
Sovereign wealth funds and retail-based mutual funds are where the real money is going to be. It reveals that this anticipated growth will come on the heels of retail mutual funds. Their assets are expected to increase by more than a hundred percent as they reach $11.9 trillion in 2025. Sovereign wealth funds are expected to be another driving force behind this expected growth. Their assets are expected to double to reach $5.7 trillion by 2025 in the same period.
The report further reveals that alternative and passive investment strategies will gain momentum in the coming years as they are expected to make up over 40% of the assets in the region. The Asian investor will be increasingly putting their money in passive and alternative investments, and these investments will grow more than threefold from $2 trillion in 2017 to $6.9 trillion by 2025. Infrastructure projects and real estate are expected to be investor favorites among these passive investments.
Other options include private equity, hedge funds, and commodities funds. Technology is also expected to play a huge role in this expected growth. As AI is incorporated into the processes and digitalized fund advice becomes common, it will substantially boost the passive investment and, in turn, the growth of the industry.
The increasingly large number of high net worth individuals in the region will also present a new and growing segment for asset managers to target. Legislative reforms in leading countries such as China are expected to provide another impetus for growth as pensions will be allowed to be invested in passive and alternative assets.
All in all, the future looks bright for the Asian wealth and asset management market as it is expected to double in size in the coming years.
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