PwC: By 2030, global fund assets will reach $200 trillion, with private equity contributing more than half of the revenue.

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

On November 24, according to reports, PwC’s latest report shows that the global asset management industry is expected to grow from $139 trillion in 2024 to $200 trillion in 2030, with private markets becoming the main growth engine and, for the first time within five years, contributing more than half of the industry’s revenue.

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

The report points out that the factors driving the rapid expansion of private markets include investors’ demand for higher returns and the opening of the field to more retail investors. At the same time, traditional fund management faces increased fee pressure, with nearly 60% of institutional investors indicating they might switch managers based on cost considerations alone.

Albertha Charles, PwC UK’s global asset and wealth management leader, said: "We expect private markets to anchor a large part of asset management growth." She notes this forecast is based on assumptions that global inflation and interest rates will continue to fall, which may prompt money to flow from cash savings into investments.

Private Markets Dominate Industry Growth

The report says key drivers of private markets’ dominance in industry growth include investor demand for higher returns, the opening of the industry to retail investors, and a decline in the number of IPOs in public markets.

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

BlackRock has invested over $25 billion in private credit and infrastructure since the beginning of 2024 to compete with giants like Blackstone, Apollo Global Management Inc., and Ares Management Corp.

Private markets are also opening up to individual investors.

The UK’s Long Term Asset Fund and similar products in Europe combine private assets with more liquid public assets. Asia-Pacific is expected to be one of the fastest-growing regions, driven by an expanding middle class and Japan’s moves to guide household savings into investments.

Additionally, reforms to US 401k pension plans and the launch of the UK Long Term Asset Fund are paving the way for more capital to flow into unlisted assets.

Traditional Fund Management Faces Persistent Fee Pressure, Margins Challenged

The report warns that despite asset growth, industry profit margins continue to be under pressure.

PwC found that 89% of asset managers have faced profit pressure over the past five years; profit relative to assets under management has dropped 19% since 2018, and is expected to fall another 9% by 2030.

PwC notes that traditional cost-cutting measures have limited effect, while expanding into new asset classes and new markets increases costs and complexity.

Moreover, the rapid growth of passive funds has intensified this trend. The report expects passive fund management assets to grow from about $40 trillion last year to $70 trillion in 2030. With the lower fees of passive funds, this further compresses overall industry fee levels.

In the face of shrinking profit margins, asset managers see technological innovation as key to future development. PwC’s report points out that "asset managers see AI integration and automation as the most important actions they are taking to transform and future-proof their business models for 2030".

Charles stated: "Winners will not be the companies that accumulate the most assets, but those that restructure fastest." She emphasized that although there are opportunities for asset growth and income, not all companies will benefit; only those that reshape their business models and clearly define their unique value will win.

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