Industry Status - The global asset management industry reached an asset management scale of $128 trillion in 2024, marking a 12% increase from the previous year, driven by strong market performance [19][8] - The industry's revenue grew by $58 billion, with 70% of this growth attributed to market performance and only 30% from net inflows, although half of the revenue growth was offset by the increase in low-cost products and declining fee rates [8][9] - Investors are shifting from actively managed funds to passive management products, particularly exchange-traded funds (ETFs), with active funds experiencing a net outflow of $100 billion in 2024, while passive funds saw a net inflow of $1.6 trillion [10][28] Three Forces Reshaping the Industry 1. **Product and Distribution Model Transformation** - The demand for ETFs is increasing, especially in the active ETF space, as they offer lower management fees and help build closer long-term relationships with clients [22][39] - Asset management firms are developing private equity products for retail investors to meet their demand for high-risk, high-return investments, although they face challenges related to liquidity and regulatory requirements [2][49] 2. **Industry Consolidation Wave** - Asset management firms are pursuing strategic partnerships or mergers to enhance scale and expand business, focusing on five key strategies: expanding product range, global business expansion, building technology and data capabilities, acquiring more long-term capital, and improving client relationships [3][12] - Successful execution of these strategies requires careful planning to bridge cultural, compensation, and value creation differences [3][12] 3. **Lean Management and Cost Reduction Needs** - Many firms are adopting three strategic models to reshape their cost structures: focusing investments on investment management and trading execution, concentrating on sales and marketing, and centralizing resources in IT [4][21] - The zero-based cost management approach is being utilized to reassess all costs from scratch, leading to changes such as outsourcing non-core functions and leveraging generative AI for process automation [5][21] Future Trends - The active ETF market is still in its early stages, with assets under management only accounting for 7% of the total ETF market, indicating a fragmented market landscape [6][45] - The integration of private assets into retail markets presents significant opportunities for asset management firms, which may consider allocating private assets into active ETFs or creating hybrid investment tools [6][49] - Industry consolidation through mergers and collaborations is expected to continue, with a focus on expanding alternative investment products and enhancing global business reach [6][12] Key Data and Conclusions - The global asset management scale grew by 12% in 2024, reaching $128 trillion [8] - Revenue growth in 2024 was $58 billion, with 70% driven by market performance [9] - Passive funds continue to attract capital, while active funds are seeing a slowdown in outflows [10] - Investment management and trading execution costs account for 30%-40% of total costs, while sales, marketing, and operations costs make up 39% [11] - The industry is focusing on five key goals for consolidation: expanding alternative investment products, enhancing global business reach, building technology and data capabilities, acquiring more long-term capital, and improving client relationships [12][56]