The asset management industry is turning into a world of haves and have-nots, Morgan Stanley analysts said on Friday, with firms adapting to the new environment feasting on market share gains, while the rest see famine.

In a note to clients, Anil Sharma, Bruce Hamilton and Michael Cyprys – equity analysts at the investment bank - wrote that “multiple disruptive threats” are bearing down on what remains a highly profitable industry.

“Major forces of disruption include unrelenting macro environment, substitute products with cost of beta continuing downward march,growing regulatory pressures, new competitors and rivalry intensifying, demographics and technology," the analysts point out. 

Meanwhile, the trio listed a number of opportunities and solutions for firms that are nimble.

These included optimising investment returns, innovating with new products, tuning-up engines by harnessing big data and seeking alternative sources of liquidity, redefining the active manager’s value proposition with ESG considerations, shifting from distribution to client acquisition and seeking M&A opportunities.

"Asset mangers’ growth has been squeezed, with net inflows below 1% in last two years. A market share game is emerging with little asset appreciation and more pressure on margins. The death of active management is exaggerated but expect to see winners/losers from industry restructuring.

“It is increasingly critical to reset the cost base and reallocate resources toward high-growth products/customer sets," the analysts added.  "Firms that embrace disruption and respond boldly and preemptively can succeed."

Globally, the house view at Morgan Stanley is that BlackRock, Blackstone, Invesco, Oaktree Capital, Partners Group, Schroders and BT Investment Management are best positioned.

Amundi, Perpetual, Magellan and Legg Mason are improving while Platinum Asset Management, Waddell & Reed and Janus Capital lag behind.