Key Takeaways
- • Global asset management AUM reached a record $147 trillion by end of June 2025, up from $135 trillion at end-2024, according to McKinsey & Company, but margins remained tight as costs kept climbing.
- • The industry's total cost base rose to $167 billion in 2024, a $12 billion (7 percent) increase versus 2023, outpacing the 5 percent average annual rise since 2020.
- • Organic growth reached 3.7 percent in 2024, up from 2.1 percent in 2023, with Asia-Pacific net flows at 8.4 percent, Europe at 2.5 percent and the Americas at 2.4 percent.
- • McKinsey estimates the convergence of traditional and alternative asset management, home country bias and active ETF growth could unlock between $6 trillion and $10.5 trillion of "money in motion" over five years.
- • Private markets fundraising fell from nearly $1.7 trillion in 2021 to roughly $1.1 trillion in 2024, with private wealth and secondaries partly backfilling the shortfall.
Summary
Asset management enjoyed a rebound in 2024 and the first half of 2025, but profitability lagged asset growth. According to McKinsey & Company, global AUM hit $135 trillion at the end of 2024, a $15 trillion rise and the largest single-year increase of the decade, with roughly 70 percent driven by market appreciation and 30 percent by net new money. Organic growth rose to 3.7 percent. By June 2025, AUM had reached a record $147 trillion, with year-to-date organic growth of 2.2 percent, which McKinsey characterizes as softer but solid.
Profitability did not keep pace. Revenues grew by double-digit percentages for a second consecutive year, yet margins rose only about one percentage point. The industry's cost base reached $167 billion in 2024. Technology, investment management and distribution costs posted the largest increases, at 9, 8 and 8 percent respectively. McKinsey attributes much of the cost growth to aging infrastructure and to operating model complexity, with product specialist headcount up 60 percent, operations roles up 30 percent and fixed compensation per FTE up more than 25 percent since 2020, indexed to 2020.
Flows concentrated in wealth, defined contribution and insurance channels, which accounted for more than 80 percent of global net flows in 2024. Passive equity and active fixed income drove the year's flows, while active equity mutual funds continued to see outflows. In private markets, fundraising slid from nearly $1.7 trillion in 2021 to about $1.1 trillion in 2024. Private wealth vehicles and secondaries offset part of the gap. U.S. evergreen and semi-liquid vehicles reached $348 billion in AUM with $64 billion in 2024 inflows, and secondaries exceeded $700 billion in AUM with roughly $130 billion raised. McKinsey estimates it may take close to three years to work through the capital backlog.
McKinsey identifies the convergence of public and private asset management as the dominant structural trend, alongside renewed home country bias and rapid growth in active ETFs. Together, these could unlock between $6 trillion and $10.5 trillion over five years. The report also finds that firms with proprietary distribution, scaled manufacturing platforms or multi-asset alternative platforms have outperformed, while firms dependent on active equity mutual funds have underperformed.
Profitability did not keep pace. Revenues grew by double-digit percentages for a second consecutive year, yet margins rose only about one percentage point. The industry's cost base reached $167 billion in 2024. Technology, investment management and distribution costs posted the largest increases, at 9, 8 and 8 percent respectively. McKinsey attributes much of the cost growth to aging infrastructure and to operating model complexity, with product specialist headcount up 60 percent, operations roles up 30 percent and fixed compensation per FTE up more than 25 percent since 2020, indexed to 2020.
Flows concentrated in wealth, defined contribution and insurance channels, which accounted for more than 80 percent of global net flows in 2024. Passive equity and active fixed income drove the year's flows, while active equity mutual funds continued to see outflows. In private markets, fundraising slid from nearly $1.7 trillion in 2021 to about $1.1 trillion in 2024. Private wealth vehicles and secondaries offset part of the gap. U.S. evergreen and semi-liquid vehicles reached $348 billion in AUM with $64 billion in 2024 inflows, and secondaries exceeded $700 billion in AUM with roughly $130 billion raised. McKinsey estimates it may take close to three years to work through the capital backlog.
McKinsey identifies the convergence of public and private asset management as the dominant structural trend, alongside renewed home country bias and rapid growth in active ETFs. Together, these could unlock between $6 trillion and $10.5 trillion over five years. The report also finds that firms with proprietary distribution, scaled manufacturing platforms or multi-asset alternative platforms have outperformed, while firms dependent on active equity mutual funds have underperformed.
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