Assets under custody reach new heights amid market growth

19 February 2025

| By Jessica Penny |

Local investors continue to increase their offshore allocations to take advantage of ongoing market momentum, new data has found.

Assets under custody grew by 8 per cent to a record high of $5.44 trillion in the six months to 31 December 2024, according to data from the Australian Custodial Services Association (ACSA).

The peak industry body for custodians and asset service providers in Australia said markets maintained strong momentum in the second half of 2024.

However, it noted that individual custodians performed differently over the half-year, influenced by industry consolidation, continued shifts in custody assets, and strong market growth.

Notably, local investors increased their allocation to overseas assets by 11.8 per cent to $1.98 trillion during the half, while Australian-domiciled investments increased 4.3 per cent to $3.41 trillion.

Assets held in Australia on behalf of offshore investors, meanwhile, increased by 6.3 per cent to $2.3 trillion.

According to ACSA, it also marked the first time that asset servicing providers in Australia managed over $6 million assets under administration, reaching $6.16 trillion as at 31 December 2024 – up 5.6 per cent.

They also settled 12.5 million trades over the period, up 9.6 per cent.

Commenting on the latest data, ACSA chief executive David Travers said: “In the December half, investors continued to increase their offshore allocations to take advantage of investment opportunities and ongoing market momentum.”

“Locally, while total asset levels reported by ACSA saw positive growth, market consolidation and client transitions have resulted in changes to individual custodians’ reported assets under custody and administration,” Travers explained.

JP Morgan remained the top provider by assets under custody at $1.29 trillion, a 7.5 per per cent increase on the previous half, ahead of State Street ($1 trillion), Citigroup ($877.03 billion), Northern Trust ($855.8 billion), and BNP Paribas ($539.9 billion).

Notably, State Street saw a 20.8 per cent increase in total assets under custody over the period.

Moreover, the CEO said that the association has remained active in responding to ongoing market and regulatory change over the past six months.

“ACSA and its members remain focused on responding to regulatory changes and evolving market frameworks, including the global moves toward T+1, continued support for the ASX CHESS replacement program, and local discussions on T+1. We have also maintained a strong focus on thought leadership and member development.”

“Innovation, industry engagement, and best practice solutions remain a critical focus for driving efficiency in custody and investment administration. Through our working groups and dedicated industry volunteers, ACSA remains well-placed to address the opportunities and challenges in the year ahead,” Travers concluded.