AUM Hits $159 Trillion: Growth Looms, But Profitability a Struggle for Asset Managers
Morgan Stanley reports global AUM hit $159 trillion, but warns that falling fees and AI adoption will decide future winners.
The global asset management industry is on a trajectory for continued expansion through 2030, but a looming challenge in profitability threatens to squeeze revenues. While the scale of assets is reaching unprecedented heights, a new report by Morgan Stanley suggests that simply growing the pile of money won't be enough to ensure success.
Record-Breaking Assets, Hidden Weaknesses
Entering 2026, the global asset and wealth management sectors have hit record milestones. Assets Under Management (AUM) have soared to a staggering USD 159 trillion, marking a 15 per cent increase year-on-year. However, the report reveals a critical nuance: this growth isn't necessarily driven by new investors.
According to the analysis, over 80 per cent of the growth for asset managers—and nearly two-thirds for wealth managers—was fueled by currency fluctuations and strong market performance rather than fresh investment inflows. Morgan Stanley warns that while many firms have "hidden" within this general market surge, being part of the pack is not the same as being in a competitive position.
The Revenue Squeeze: Fees vs. Growth
A worrying trend for industry leaders is the disconnect between asset growth and actual revenue. Morgan Stanley estimates that while AUM will grow by 9 per cent annually, industry revenues will only grow by 7 per cent. This gap is attributed to a steady decline in average management fees, which are expected to drop from approximately 35 to 32 basis points.
The Power of Private Markets
To combat declining fees, the industry is shifting its focus toward high-margin sectors. Private markets are expected to become the primary engine of profitability. The report predicts that by 2030, private markets will generate 39 per cent of industry revenues, despite accounting for only 15 per cent of total AUM.
Democratizing Custom Investments
Another significant shift is the accessibility of customized investment solutions. Once the exclusive domain of institutional giants and ultra-high-net-worth individuals, these tailored models are now reaching a broader investor base. In the US alone, assets managed through these external customized models have more than tripled since 2023 and are projected to hit USD 1.6 trillion by 2030.
AI: The Great Operational Disruptor
Artificial Intelligence is emerging as the primary force reshaping how firms operate. While more than half of the firms have already integrated AI into at least one part of their investment process, the financial payoffs have remained limited due to isolated usage.
Morgan Stanley suggests that the real winners will be those who implement AI across their entire operations rather than using it for single tasks. Firms that take this holistic approach could see their cost-to-income ratios improve by as much as 15 percentage points by 2030.
"The asset management industry will be substantially larger in 2030 without necessarily being more profitable, and the difference between leaders and the rest will come from where and how they compete rather than how much they gather."