PwC: By 2030, the global fund size will reach USD 200 trillion, with private equity contributing over half of the revenue

The latest report shows that the global fund size will reach $200 trillion by 2030, and private equity will soon contribute to half of the fund industry's revenue.

On November 24, it was reported that PwC's latest report indicates that the global asset management industry is expected to grow from $139 trillion in 2024 to $200 trillion by 2030, with the private equity market becoming the main engine of growth and contributing more than half of the industry's revenue for the first time in five years.

The consulting firm’s survey of 300 global asset management companies, institutional investors, and distributors found that private equity market revenue is expected to reach $432 billion by 2030, surpassing the total revenue of traditional active management and passive investment products. In 2024, private equity assets accounted for only 44% of the industry's total revenue.

The report points out that the factors driving the rapid expansion of the private equity market include investors' demand for higher returns and the sector's opening up to more retail investors. Meanwhile, traditional fund management businesses are facing increasing fee pressures, with nearly 60% of institutional investors indicating they might change managers solely due to cost considerations.

Albertha Charles, head of PwC's global asset and wealth management business in the UK, stated: "We expect the private equity market to anchor a significant portion of the growth in asset management size." She noted that this forecast is based on the assumption that global inflation and interest rates will continue to decline, which may prompt funds to shift from cash savings to investments.

Private Equity Market Dominates Industry Growth

The report states that the driving factors for the private equity market's dominance in industry growth include investors' demand for higher returns, the industry's opening to retail investors, and a decrease in the number of public market IPOs.

The rapid growth of the private equity market has attracted the attention of many traditional asset management companies. Traditional fund companies such as Franklin Resources, Invesco, and State Street Bank have recently entered the private equity space through acquisitions or partnerships.

BlackRock has spent over $25 billion on private credit and infrastructure investments since early 2024 to compete with giants like Blackstone, Apollo Global Management Inc., and Ares Management Corp.

The private equity market is also opening up to individual investors.

The Long Term Asset Fund launched in the UK and similar products in Europe combine private equity assets with more easily tradable public assets. The Asia-Pacific region is expected to become one of the fastest-growing markets, driven by the expansion of the middle class and Japan's guidance on directing household savings into investments.

Additionally, reforms to the U.S. 401k retirement plan and the introduction of products like the Long Term Asset Fund in the UK are paving the way for more funds to flow into non-listed assets.

Traditional Fund Management Faces Increasing Fee Pressure and Profit Margin Challenges

The report warns that despite the growth in asset size, the industry's profit margins continue to be under pressure PwC found that 89% of asset management companies have faced profit pressure over the past five years, with profits relative to assets under management declining by 19% since 2018, and expected to decline another 9% by 2030.

PwC pointed out that traditional cost-cutting measures have limited effectiveness, while expanding into new asset classes and markets has increased costs and complexity.

Additionally, the rapid growth of passive funds has exacerbated this trend. The report predicts that the size of passive fund management will grow from about $40 trillion last year to $70 trillion by 2030. Due to the lower fee rates of passive funds, this further compresses the overall fee levels in the industry.

In the face of narrowing profit margins, asset management companies view technological innovation as key to future development. The PwC report states, "Asset management companies see AI integration and automation as the most important actions they are currently taking to transform and future-proof their business models for 2030."

Charles stated, "Winners will not be those companies that accumulate the most assets, but those that restructure the fastest." She emphasized that while there are opportunities for asset growth and revenue generation, not all companies will benefit; only those that reshape their business models and clarify their unique value will succeed.

Risk Warning and Disclaimer

The market carries risks, and investments should be made with caution. This article does not constitute personal investment advice and does not take into account the specific investment objectives, financial situation, or needs of individual users. Users should consider whether any opinions, views, or conclusions in this article are suitable for their specific circumstances. Investing based on this is at one's own risk