Fund management: global trends

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It had to be too good to be true. At the beginning of this year, as investment banks revealed ever-increasing horrors, the fund management industry appeared to remain relatively solid. But things are looking a lot worse these days.

Being an industry that's all about long-term investments, it takes its time publishing statistics. In August, the Europe Fund and Asset Management Association (EFAMA) revealed that global assets under management had, in fact, shrunk by 11.7% in the first quarter of 2008.

The latter half of the year has been even worse. Figures from Lipper Feri (published in November) reveal that European funds are losing money at an alarming rate. In the month of September alone, €124bn flowed out of them. US funds saw €41bn of redemptions, while Asia posted a relatively stable -€1.4bn.

Total redemptions from equity and fixed-income funds "were massive at a combined $100bn," in October, according to a report by JPMorgan analyst Kenneth Worthington.

Until recently, asset managers had largely been reluctant to make redundancies. However, as bonus season approaches, and profits continue to slide, job cuts have been inevitable.

Fidelity Investments, Putnam Investment, New Star Asset Management, Schroders, Henderson Global Investors and Legg Mason have either announced or are thought to be considering redundancies in recent weeks.

Still, according to a survey by US management firm FS Associates, asset managers are hiring more staff than they're firing. It quizzed 70 firms at the beginning of November, 20% of whom said they had, or expect to, make cuts, while 25% intend to increase headcount.

Europe and the US have the lion's share of the world's investment fund assets, having 46.9% and 34% respectively. Then it's Australia, Brazil, Japan, Canada and China, which all have much smaller slices of the pie.

This article was last updated on 19 November 2008.

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