Money managers in 2023 recovered just over half of the $9 trillion in institutional assets they lost the year before, even as lingering economic and political uncertainties kept a lot of money sidelined, including a record $6 trillion parked in money market funds alone.
When that money comes off the sidelines, managers of active fixed-income and alternatives strategies will likely continue picking up market share at the expense of equity managers, analysts said.
Pensions & Investments’ 2023 survey of the largest money managers showed institutional assets for 411 managers around the globe rising 9.7%, or $4.89 trillion, to $55.23 trillion as of Dec. 31 — roughly half the prior year’s $9.32 trillion plunge.
Total worldwide assets for those managers rose 11.2%, or $8.7 trillion, from the year before to $86.18 trillion.
Despite a start to the year dominated by recession fears and some notable bank failures, managers — still smarting from the U.S. rate hiking cycle that pummeled stock and bond markets alike in 2022 — mostly saw a proverbial glass that was half full rather than half empty as 2023 drew to a close.
Optimism was in short supply as the year began, but then chipmaker Nvidia announced impressive results in May and suddenly everyone was talking about artificial intelligence and who the beneficiaries would be, said Paula Robinson, Willis Towers Watson’s head of global equity manager research.
That spike in market enthusiasm helped levitate beta returns for the year.
Benchmark indexes for U.S. and global ex-U.S. stocks ended 2023 up roughly 26% and 18% respectively, while U.S. and global ex-U.S. bond indexes gained roughly 5.6% apiece. The only major asset class not invited to the party was real estate, with the NCREIF Fund index for private real estate plunging 12.7% for the year.
Last year’s AI-powered rally, meanwhile, gave already-dominant U.S. megacap growth stocks added momentum, with the so-called Magnificent Seven — Alphabet, Amazon, Apple, Meta, Microsoft, Nvidia and Tesla — accounting at times for close to 30% of the S&P 500 index.
When that money comes off the sidelines, managers of active fixed-income and alternatives strategies will likely continue picking up market share at the expense of equity managers, analysts said.
Pensions & Investments’ 2023 survey of the largest money managers showed institutional assets for 411 managers around the globe rising 9.7%, or $4.89 trillion, to $55.23 trillion as of Dec. 31 — roughly half the prior year’s $9.32 trillion plunge.
Total worldwide assets for those managers rose 11.2%, or $8.7 trillion, from the year before to $86.18 trillion.
Despite a start to the year dominated by recession fears and some notable bank failures, managers — still smarting from the U.S. rate hiking cycle that pummeled stock and bond markets alike in 2022 — mostly saw a proverbial glass that was half full rather than half empty as 2023 drew to a close.
Optimism was in short supply as the year began, but then chipmaker Nvidia announced impressive results in May and suddenly everyone was talking about artificial intelligence and who the beneficiaries would be, said Paula Robinson, Willis Towers Watson’s head of global equity manager research.
That spike in market enthusiasm helped levitate beta returns for the year.
Benchmark indexes for U.S. and global ex-U.S. stocks ended 2023 up roughly 26% and 18% respectively, while U.S. and global ex-U.S. bond indexes gained roughly 5.6% apiece. The only major asset class not invited to the party was real estate, with the NCREIF Fund index for private real estate plunging 12.7% for the year.
Last year’s AI-powered rally, meanwhile, gave already-dominant U.S. megacap growth stocks added momentum, with the so-called Magnificent Seven — Alphabet, Amazon, Apple, Meta, Microsoft, Nvidia and Tesla — accounting at times for close to 30% of the S&P 500 index.
