Assets managed by Australian managers that appear in Watson Wyatt's latest World 500 Ranking survey plummeted by 31 per cent in 2008 to US$475 billion ($546 billion), down from US$691 billion ($795 billion) the year before.
"2008 was a dreadful year for investment managers with the majority posting record losses," Watson Wyatt head of manager research Hugh Dougherty said.
"This result can be attributed to a high level of equity management by Australia's largest managers, the underperformance of Australian equities vis-a-vis international equities, and a weakening of the Australian dollar in the second half of 2008."
Despite the falls, 15 Australian fund managers were still among the world's top 500 investment managers.
Colonial First State remained the largest Australian manager, ranked at 122 overall but down 14 places from last year.
Macquarie Bank Group was the second largest manager, ranked 126, followed by AMP at 135.
"The Australian managers whose ranking positions had decreased the most in the latest survey tended to be those that were primarily focused on equity and property," Dougherty said.
The three largest asset managers in the world were Barclays Global Investors, Allianz Group and State Street Global.
Globally, assets managed by the 500 fund managers also fell by over 23 per cent in 2008 to US$53.4 trillion, down from US$69.4 trillion in 2007.
