The research, compiled by McKinsey for FTfm, reportedly shows that worldwide profits for traditional mutual fund groups fell 2.9% to €66bn in 2016 while total assets under management grew by 3% to €66tn.
The fall in profits was due to 4.8% higher operating costs, increased downward pressure on fees and competition from cheaper passive options.
The discrepancy between lower profits and growth in assets under management represents a ‘remarkable turning point’ for the active management industry, the firm asserted, during a time in which political uncertainty is feeding into the bottom line.
New business inflows for traditional fund managers also took a dive globally, falling by 80% to €435bn, the lowest level since 2012.
Traditional managers in Europe saw their new business inflows decline by 20% to €426bn, leading to a 10% decline in profits.
North American fund houses also felt the pressure of competition from passive products, registering net investor outflows circa €146bn, relative to positive inflows of €465bn in 2015.
