Assets managed by the world’s largest 500 investment firms fell in 2015 for the first time since 2011.

Data from Willis Towers Watson shows total assets under management were down 1.7% to $76.7trn at the end of 2015, compared to $78.1trn the year before.

North American firms’ AUM were $44trn at the end of 2015, a decrease of 1.1% from the previous year, while assets managed by European managers, including the UK, decreased by 3.3%, to $25.1trn.

UK-based firms’ assets decreased 2%, reducing their AUM to $ 6.6trn. 

“The decline in global assets demonstrates the impact of the challenging investment landscape and currency fluctuations on asset managers across the globe,” said Luba Nikulina, global head of manager research at Willis Towers Watson.

“In 2014 our research showed a dramatic slowdown in growth, yet assets managed by the largest 500 asset managers still grew by just over 2%. This year the figures are markedly different. The economic slowdown has impacted investment performance. 

“At the same time, asset owners are rethinking their business models by internalising asset management capabilities at the larger end of the spectrum and consolidating at the smaller and mid-size end which also has an impact on capital flows to the industry. 

“This trend will continue to put pressure on revenues and require asset managers to further adapt to this challenging and continuously changing environment.”

The research, conducted in conjunction with Pensions & Investments, a US investment newspaper, reveals that actively managed assets, which continue to make up the majority of total assets (78.3%), also fell 2.8% in 2015, while passive assets declined at a faster rate, 5.5% during the year.

Although the top 20 managers experienced a 1% decrease in assets from $32.5trn to US$32.1trn, their share of total assets increased slightly from 41.6% to 41.9%.

The research shows that traditional equity and fixed income still make up the majority of all assets (78.2%: 45.4% equity, 32.8% fixed income), but they declined by 7.1% during 2015. 

The only stand-out category in terms of growth in 2015 is alternative assets which grew by 25.1%.

Luba Nikulina said: “The increase in alternative assets shows that in an environment of low returns and increased uncertainty, investors are under pressure to identify other means of achieving more diversity and higher returns.

“This shift in strategy is both welcome and essential if the investment industry is to adapt to meet its current and future challenges. However, the world of alternatives is much more complex than traditional bonds and equities so investors will need to focus on skill, holistic risk management and best in class implementation.”