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Overall, the financial services industry saw profitability decline at its most rapid pace since the review started in 1989 as banking, building societies, life insurance, general insurance and securities trading all noted a decline in business volume.

However, fund managers were generally optimistic, albeit marginally less so than the previous quarter. PWC said as a result of business volume remaining strong, groups had increased staff numbers for the 14 quarter in succession.

Robert Mellor, financial services tax markets leader at PWC, said: "Fund management has been slightly removed from the issues that went on in the credit crunch."

He highlighted recent IMA data, which saw a vast boost to assets under management in April, marking the strongest month for sales data in a year.

"AUM is spikey at the best of times anyway, but this year has seen huge swings." he said.

Much of the recent inflows came from overseas investors, added Mr Mellor, suggesting this could be down to strong performance from onshore funds.

Rather than looking to cut costs, fund houses were maintaining head counts, continuing to train their staff and keep a "healthy balance" for marketing budgets, Mr Mellor explained.

"Asset managers seem to be in phase where they are saying we can compete our way out of this," he said. "They are providing new services and launching new products."

As a result of that, firms could not cut back on personnel or marketing, as they needed to educate investors about these new products.

Rather than making people redundant, Mr Mellor believed companies would look to improve cost-efficiency in the processes of running the business.

"Competition at home and abroad is the killer they see over the next 12 months," he said. "This will be interesting – not everyone can win that battle.