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As active asset managers consolidate, will fund investors be left better off?

Trinity Chua
Trinity Chua8/21/2017 08:00 AM GMT+08  • 9 min read
As active asset managers consolidate, will fund investors be left better off?
(Aug 21): Insurance giant Prudential announced on Aug 10 that it would merge its asset management business with its UK and Europe insurance businesses to save costs and improve its products.
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(Aug 21): Insurance giant Prudential announced on Aug 10 that it would merge its asset management business with its UK and Europe insurance businesses to save costs and improve its products.

The 142-year-old company is only the latest in a growing list of financial services groups that have sought to bolster their money management units through a merger or acquisition deal. Other recent deals have included the union of Amundi and Pioneer Investments, which came together to form a £1.3 trillion ($2.09 trillion) asset management giant; the formation of Janus Henderson Group, now one of the world’s 20 largest fund houses with combined assets under management of US$345 billion ($470.4 billion); and the merger of Standard Life and Aberdeen Asset Management to form Europe’s second-largest fund house with £670 billion in AUM. Shares of the new entity, Standard Life Aberdeen, rose 3.2% to 424 pence on their first day of trading on Aug 14.

As investors pour more and more funds into low-cost exchange-traded funds, and as regulatory costs soar, firms that focus on traditional actively managed funds are scrambling to gain scale and maintain their profitability. Investors put almost US$500 billion into index funds and ETFs for the 12 months to May, while active funds suffered outflows of US$538 billion, according to fund flow tracker EPFR Global in a media report.

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