How the downturn is changing transfer pricing for asset management
August 05, 2009
Lucia Fedina, Justen Ghwee, Juliane Keppler, and Gus Lee, of KPMG discuss how the global financial crisis has affected asset management transfer pricing.
Recent economic events have significantly affected the asset management industry. According to a survey reported on in HedgeWorld News (Investors Eye Safer Funds, Firms Must Adjust: Survey, July 7 2009), global assets fell by 18% to $48.6 trillion in 2008. Furthermore, the Investment Company Institute (ICI) reported in its April 2009 Fact Book that the US mutual fund market, as of December 2008, had $9.6 trillion in assets under management (AUM), a decrease of 20% from 2007. Many investors have liquidated their holdings to obtain more cash; accordingly, net new cash flow, defined as the dollar value of new fund sales minus redemptions, combined with net exchanges, into all US mutual funds was only $411 billion, less than half of the level recorded in 2007. Given the recent poor performance in the market and high rates of share redemption, earnings for 2009 for the asset management industry are anticipated to be even lower than 2008 earnings, also according to ICI.
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