• A Rising Tide for Asset Managers has bought time and added revenues for money managers to futureproof their businesses. A cyclical lift in markets and the best flows in recent memory ~5%, supported by an improvement in investment performance is likely to support mid to high teens top-line growth across our coverage in 2021. But with prospects for Fed tapering and higher yields/rates, we see risk to flow sustainability and potentially negative mix shift and reallocations into lower fee fixed income products. Further, with >50% of active equity funds still underperforming benchmark, secular challenges are likely to remain intense for many, accelerating strategic discussions around optimal scale and capability.

• Leveraging Sustainability/ESG and Thematic capability key to success in active – but also see potential risk/uncertainty given increased regulatory scrutiny of framework, processes and disclosure. We see share shifts in favor of ESG accelerating in 2021 with $140bn inflows to active ESG equity product vs $200bn inflow from active equity through August 2021; highlighting ESG as a critical battle ground for competition in active. We see growing divergence between those able to pick up market share here and through a strong thematic offering, with demand for thematic products (often intersecting with ESG) evident in the leading flows enjoyed by prominent technology, healthcare, and energy transition product in 2021. We see a long runway ahead for ESG funds with expectations for ~24% AUM CAGR reaching $6.5tr globally by 2025.