ZURICH (Reuters) - Profitability at asset managers has slipped for the past two years and is likely to decline further through 2028 as investors increasingly opt for products with lower fees, such as exchange-traded funds (ETFs), according to a new study.

The study of 40 global asset managers including BlackRock ( BLK ), State Street, JPMorgan ( JPM ) and Goldman Sachs ( GS ) by German financial strategy advisor zeb Consulting showed their profits in 2023 slipped to 8.2 basis points (0.082%) of assets under management from 10.1 basis points in 2021 and 9.4 points in 2022.

"The good years are over for now," zeb senior consultant Fränk Hamelius, one of the study's authors, said on Monday.

Over the past five years, the assets under management of the firms studied have risen by 8.8% annually on average, but their operating profits have only gone up by 0.7% per annum, it said.

Under the baseline scenario forecast by the study, profits would likely slip to 5.5 basis points of assets under management by 2028 and could fall to as little as 3.9 points. In the best case, they could increase to 9.1 basis points, it predicted.

With interest rates having risen in the last few years, investors moved money from equity funds into bond funds, yielding lower profits for asset managers, the study said.

Medium-sized asset managers are on average significantly less profitable than large and small ones, it showed.

Firms with assets under management of between 370 billion euros and 1.5 trillion euros are often too small to offer products such as ETFs, but also too big to offer high-yield niche funds, Hamelius said.

That is putting pressure on firms to grow through mergers, and accelerating industry consolidation, he said.