McKinsey Wins Best Investment Industry Paper 2020
The investment industry faces multiple challenges and opportunities in the years ahead – from extraordinary growth prospects in Asia, changing consumer expectations, the emergence of new technologies, a growing power shift towards intermediaries and distributors, and a continuing challenge to active management amidst fee compression. How should asset managers adapt to the changing dynamics of the industry? Against this backdrop, our winning paper examines the business strategies most likely to succeed in an era of unrelenting change.
WINNER: McKINSEY & COMPANY
McKinsey & Company's deep dive into the North American asset management industry finds an industry in structural transition. This 30-page report was published at the end of 2019 and just missed the cut-off for last years' awards, but the issues remain highly relevant today. The authors explore the structural forces at work in the asset management industry, examining where the structural shifts in demand are coming from and showing the level of fee compression that has taken place in recent years. The study concludes by revealing which firm types are likely to succeed and suggesting four recipes for future success.
The concept of trust is fundamental to the relationship between asset managers and investors, who are entrusting their funds to a third party. Without such trust, financial transactions would be inefficient and capital markets could not properly function. In this survey and report, CFA Institute explores how financial trust has evolved and describes three pillars, or virtues, which build trust.
Index funds may be scalable and with low costs, but they have serious shortcomings which the author discusses in this neatly presented report. Investors need to ask whether cap-weighted, passive funds are aligned with their objectives, or if it is possible to follow a construct that, after costs, can better deliver those objectives. The report also looks at the zero-sum argument, market inefficiency, and the confusion created by factor investing.
For compliance reasons, this paper is only accessible in certain geographies
Invesco's Sovereign Asset Study has become a feature in the calendar for Sovereign Funds and Central Bankers. This eighth annual study reports on the findings of a survey of well over 130 sovereign investors, highlighting newly emerging trends and themes. The survey reveals that many sovereign investors had healthy cash levels as the coronavirus pandemic broke and were able to use their long-term horizon to view the crisis as an opportunity to buy at depressed levels. With energy prices under strain and fiscal demands high, some sovereign funds are braced for calls on capital from governments, but Invesco does not see this as likely to lead to major reallocations or forced sales.
This blockbuster report from Bain & Company reviews 2019 and examines the strategies which have been shaping 2020. This year’s report has a particular emphasis on technology companies, impact investing, exits, due diligence, and pricing power, while the final section of the report compares public versus private returns and asks whether private equity is losing its edge.
In this 40-page joint research effort, Oliver Wyman and Morgan Stanley present an in-depth review of the state of the Wealth Management industry and provide recommendations for management teams with responsibility for charting their firms’ path through ever-changing client demands and a challenging outlook for revenue growth. The authors suggest initiatives for C-suite executives to consider, cutting across three different strategy areas.
This 24-page white paper from Deloitte discusses the future impact of technology upon global fund management businesses. The report argues that asset managers have been slow to embrace new technology, despite the changing expectations of their customers. A greater focus on client experience and adoption of distribution technology will be essential for firms to succeed in the years ahead.
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