What is Asset Management Industry?

The asset management industry is a segment of the financial services industry that involves managing and investing assets on behalf of clients, which can include individuals, corporations, and institutions. The asset management industry has grown significantly over the years, with assets under management (AUM) reaching trillions of dollars globally. .

Asset management firms offer a range of services, including investment management, financial planning, and risk management. These firms employ investment professionals who have expertise in various asset classes and use sophisticated techniques to analyse data and make investment decisions.

Growth Trend of the Asset Management Industry

The asset management industry has experienced significant growth in recent years, driven by a number of factors. These include the growing number of high-net-worth individuals worldwide, increased demand for investment advice and financial planning services, advances in technology, favourable government policies, and the growth of the Indian economy.

At the same time, there has been a shift towards fee-based models in the asset management industry, as clients increasingly seek transparent and objective advice. This has led to a growth in assets under management (AUM) for wealth management firms that have adopted this approach..

Another factor driving the growth of the wealth management industry is the increasing availability of digital tools and platforms that enable clients to manage their investments and access financial advice online. This has opened new markets for wealth management firms, particularly among younger, tech- savvy investors.

The increasing adoption of sustainable investing practices is the major reason for the growth in the asset management industry. Investors are increasingly looking for investment products that align with their values, and asset managers that offer sustainable investment solutions are likely to benefit from this trend.

Major Funding Industries

The asset management industry in India involves investing in a variety of industries and sectors, depending on the investment objectives of the funds and portfolios. However, there are some major industries and sectors that have attracted significant funding in recent years. These include:

• Financial services: The financial services sector, which includes banks, insurance companies, and non-banking financial companies (NBFCs), has been a major recipient of funding from asset management companies in India. This is due to the large market size of the sector and the potential for growth in areas such as digital banking and insurance.
• Information technology: The information technology sector, which includes software and technology services companies, has also attracted significant funding from asset management companies in India. This is due to the strong growth potential of the sector, as well as the increasing adoption of technology across various industries.
• Healthcare: The healthcare sector, which includes pharmaceuticals, biotechnology, and healthcare services companies, has been a major recipient of funding in recent years. This is due to the increasing demand for healthcare services in India, as well as the potential for growth in areas such as telemedicine and healthcare technology.
• Consumer goods: The consumer goods sector, which includes companies that produce and sell consumer products such as food and beverages, personal care products, and household items, has also attracted significant funding from asset management companies in India. This is due to the large consumer market in India and the potential for growth in areas such as e-commerce and digital payments.
• Infrastructure: The infrastructure sector, which includes companies that provide infrastructure services such as power, transportation, and telecommunications, has been a major focus of the Indian government in recent years. This has led to increased investment in the sector from asset management companies, particularly in areas such as renewable energy and transportation infrastructure.

Future of the Asset Management Industry

The future of the asset management industry looks promising, with several trends and developments expected to shape the industry in the years to come.

The ongoing expansion of passive investment techniques is one of the key themes that is likely to shape the future of the asset management sector. Due to their simplicity and transparency, low-cost investment options have grown in favour among investors, and it is anticipated that they will continue to displace actively managed funds in terms of market share.

Sustainable investing is also expected to be a major trend in the asset management industry in the future. As investors become more aware of environmental, social, and governance (ESG) issues, they are likely to seek out investment products that align with their values. Asset managers that are able to offer sustainable investment solutions are likely to benefit from this trend.

Finally, the asset management industry is likely to face ongoing regulatory scrutiny, particularly with regard to fees and conflicts of interest. Firms that are able to navigate these regulatory challenges effectively are likely to thrive in the future.