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Bloomberg’s Dark and Gloomy Industry Forecast

A Bloomberg article further clouds the outlook for asset managers, saying the $74 trillion industry is headed towards a “a shakeout where only the strongest will survive.” The article points to the usual suspects: a 6% fee decline for mutual funds and ETFs in 2018 compared with the year before; net outflows, the fact that behemoth funds like Fidelity’s Magellan are no longer in the top 25; and that only three of the top 10 funds worldwide are actively managed funds, according to Morningstar data. The article also looks at how firms are facing down these challenges and cites hundreds of job cuts at Legg Mason, BlackRock and State Street; management shakeups; and a string of mergers that have not all been successful. The persistent theme amid the doom and gloom is that industry continues to shift, and asset managers need to adapt. A recent PwC report asserts that firms who want to survive will have to reposition themselves by outsourcing certain functions, chasing top talent, embracing technology, and looking for creative ways to price their products to satisfy investor demand for value, among other strategies.

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