Despite several headwinds, the asset management industry is well-placed for solid growth in the long run, driven by the high demand for efficient utilization and management of assets, the growing popularity of ESG and alternative investments, and the rapid adoption of digital technologies.
As the industry’s growth prospects look promising, it could be wise to invest in fundamentally strong asset management stocks Diamond Hill Investment Group, Inc. (DHIL – Get Rating), Hywin Holdings Ltd. (HYW – Get Rating), and Ashford Inc. (AINC – Get Rating) for potential gains.
The asset management sector has been undergoing a massive transformation due to ongoing challenges such as rising fee pressure, growing costs, and shifting investor preferences, including enhanced interest in alternatives, thematic investment needs, and digital preferences.
The macroeconomic environment of market volatility, inflation, rising interest rates, and a looming economic downturn has aggravated these challenges. Despite lingering headwinds, the asset management industry remains resilient and positioned for robust growth and profitability.
Industry players continue to evolve their business models by scaling and adding new capabilities, such as ESG solutions, distribution, and technology capabilities, potentially through mergers and acquisitions (M&A). Firms in the asset management industry also consider entering the alternative space and offering new private market products for retail and institutional investors.
Private market products often involve underlying investments, including private equity, private credit, or private real estate, which have lower correlations with traditional markets. High-growth alternative investments represented more than $20 trillion of global AUM as of year-end 2022. The strong momentum is projected to prevail with a 7% CAGR in alternative assets over the next five years.
According to a report by Precedence Research, the global asset management market is expected to reach $7.60 trillion by 2032, growing at a 35.2% CAGR.
Furthermore, the asset management industry is increasingly prioritizing digital transformation. Asset managers have been accelerating their…
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