The Taiwan Banker

According to the recent Global Asset Management Report 2026: An Imperative for Growth and the New Economics of Asset Management report from Boston Consulting Group (BCG) global assets under management (AUM) have recorded double-digit growth for two consecutive years, reaching a record US$147 trillion in 2025. Ample liquidity, a growing population of high-net-worth clients and rising retirement needs amid population ageing have made asset management one of today’s most closely-watched financial sectors. Yet the headline figures mask underlying challenges. More than 80% of revenue growth came from market appreciation, while industry profit margins remained at around 30%. The strong AUM growth therefore reflected favorable market conditions more than improvements in managers’ own capabilities. Rather than relying on rising markets, the industry’s ability to remain competitive will depend on finding new growth engines. In response, asset managers are reassessing not only their pursuit of AUM growth, but also their products, distribution channels, and technology and business strategies. Alternative investments are one key area of growth. In contrast to conventional publicly-traded equities, bonds and mutual funds, alternative investments include private equity, private credit, real estate, and infrastructure. They may also employ leverage, short selling and other non-traditional investments strategies. Investors are turning to these assets for greater diversification as market volatility increases. Exchange-traded funds (ETFs) are another major focus. Their low costs, transparency and ease of trading make them well suited to portfolio diversification, and their share of global AUM continues to rise. Innovation has expanded beyond passive index-tracking products to active and multi-asset ETFs. The growth of active ETFs reflects investors’ desire to combine liquidity and low cost with the potential for outperformance by professional managers. BCG estimates that active ETFs generate returns broadly comparable with those of actively managed mutual funds, but at average management fees of 0.64% instead of 1.08%. The growing popularity of ETFs also points to increasing product standardization, raising questions about whether traditional product selection strategies can continue delivering superior returns. With fewer meaningful differences between products, asset managers must make more effective use of financial adviser networks, wealth-management channels and digital platforms for targeted marketing. In other words, ETFs are shifting the industry from a product-led model towards a client- and distribution-led model. Customer-acquisition costs and control over distribution are becoming central business considerations. Digital assets and asset tokenization are equally important. As of April 2026, the global market value of digital assets such as Bitcoin and stablecoins stood at US$2.3 trillion. Although tokenized real-world assets (RWAs) remain at less than US$25 billion, tokenized US Treasuries grew by 170% in 2025, while tokenized money market funds nearly doubled. As conventional financial products converge with blockchain technology, BCG projects that the RWA market could reach US$14 trillion by 2030, becoming an important component of asset allocation. Digital technology is not only broadening the product range, but also transforming asset managers’ operating models and the wider industry ecosystem. Account opening, trading, asset allocation and investment advice can already be delivered through digital platforms, making services faster, more convenient and more transparent. For asset managers, emerging technologies can reduce costs and improve profitability. Artificial intelligence is attracting particular attention. AI can support more personalized investment advice through its analysis of large volumes of market and client data. It can also improve customer service, risk management, and regulatory compliance while reducing manual processing costs and increasing efficiency and accuracy. BCG estimates that AI could reduce asset managers’ operating costs by 25% to 35% over the next three to five years. It may also substantially lower the cost of portfolio customization, extending services previously reserved for high-net-worth clients to a broader investor base, and potentially increasing client coverage three- to fivefold. This does not diminish the importance of high-net-worth clients. On the contrary, asset managers are likely to move beyond selling individual products and instead develop premium, highly customized solutions for this segment. As client wealth expands and family structures become more complex across generations, individual financial products alone are unlikely to meet succession and wealth-transfer needs. Asset managers will increasingly need to integrate trusts, tax planning, cross-border asset allocation, and family-office support. Beyond maintaining investment performance, they must therefore be capable of collaborating with other financial institutions, law and accounting firms, and specialist advisers to provide comprehensive solutions for wealthy families. These international trends offer several lessons for Taiwan as it advances its Asian Asset Management Center initiative. Attracting capital and expanding the market are important, but building an internationally competitive financial ecosystem is equally essential. This will require a supportive environment for innovation, more effective regulation, and the recruitment and development of high-caliber, cross-disciplinary talent. Only then will Taiwan be able to distinguish itself in an intensely competitive global market. The author is Chief Researcher at the Financial Research Institute of TABF.