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Disruption and Change within the Investment Industry

Is Digitisation the Key to Efficiency, Reduced Costs and Higher Returns? 

Advancements in technology have been fruitful for those able to adopt new approaches and digital systems. However, this change and innovation has brought about a level of disruption and competition that has been challenging to navigate for many within the investment industry. With increased performance pressure, market volatility and tighter regulation – is now an apt time to review existing processes and systems?

This collection of papers considers the solutions available to teams navigating disruption and change within the investment industry – whether that's operations, efficiency, compliance or portfolio returns. These include assessments of how tech could be key for new business growth as well as a debate around whether the 'secret sauce' recipe is a combination of human creativity and AI.

Digital disruption and change within the investment industry

Digital Transformation and Operational Change

Building Operational Resilience in Capital Markets (SimCorp, 2020)

This study reveals some major operational challenges facing financial institutions today. Issues such as manual data reconciliation and legacy technology systems are especially problematic, despite digital advancement within the industry.

‘A New Platform Paradigm’ – Infrastructure that drives change (AMX, 2020)

For compliance reasons, this paper is only accessible in certain geographies

The investment industry continues to evolve at a rapid rate, but the coronavirus crisis has also shed light on areas that need more development. AMX presents the case for asset pooling and a new platform model as a solution to drive change.

Digital Transformation in the Hedge Fund and PE Industry (2020)

This paper assesses how tech can be effectively harnessed by private equity firms and hedge funds in response to the disruption caused by digital transformation. The authors discuss crypto, big data, and AI among other topics.

Evolving The Asset Manager's Business Model (Enterprising Investor, 2020)

Innovation is critical to the transformation of the fund management sector, according to this Enterprising Investor blog. The authors provide three case studies showcasing why and suggest that open, responsible innovation is key to success.

Podcast: The sentiment factor (NN IP, Apr 2020)

This podcast from NN Investment Partners takes a deeper look at how sentiment data is used to make investment decisions. They argue that the best investment results are achieved by combining machine learning with human creativity.

European Investment Management Industry Annual Review (EFAMA, 2020)

This review from EFAMA covers data from multiple topics concerning the European Fund and Asset Management Industry. This includes economics, regulation, pensions, stewardship and market structures.

Machine Learning: No silver bullet? (Janus Henderson, Mar 2020)

For compliance reasons, this paper is only accessible in the United States and Canada

Janus Henderson discusses the impact that machine learning and quantitative finance has had across the industry. They draw comparisons with existing models and consider the potential future state and benefits of machine learning.

Digitalization of Wealth Management (SimCorp, 2020)

Simcorp considers the evidence for technological advancement and adoption within wealth management portfolios. They argue that technical evolution is essential for client retention as well as attracting new clientele.

Regulation and Market Infrastructure

Research Spending Post-MiFID II and Intra-COVID-19 (Enterprising Investor, 2020)

This blog considers the structural, regulatory, and economic changes that may occur as a result of the coronavirus crisis. In particular, it discusses whether the pandemic will bring about a MiFID II rules review sooner than expected.

Regulations and Responsibilities Affecting Asset Managers (Baker McKenzie, 2020)

Baker McKenzie provides a regulatory guide for senior managers and directors in the asset management industry. It outlines guidance on licensing, approvals, and requirements as well as other tips to help navigate the regulatory environment.

EU Financial Services Horizon Scanner (Clifford Chance, May 2020)

Clifford Chance provides a snapshot of the most impactful EU initiatives related to the finance sector. The Scanner identifies initiatives across several major themes including investment management, financial crime and payments.

Financial Services Regulatory, Accounting and Audit Bulletin (PwC, May 2020)

In this month's edition of the PwC bulletin, the treatment of SMEs, LIBOR transition timelines and ESG disclosures are covered, as well as an analysis of business plans from the FCA and PRA.

Market Practice and Regulatory Policy Report: Covid special (ICMA, 2020)

ICMA's quarterly paper includes a special report on the impact of COVID-19 on capital markets. It also covers topics related to regulation, repo and collateral markets, international capital markets, ESG themes, bond markets and fintech.

Performance Challenges Facing Asset Managers

Institutional Investment Mandates: A base for long-term performance (State Street, 2020)

State Street considers the reasons behind the long-term nature of asset owner investment goals. They assess the challenges that longer-term horizons can bring, including the differing goals and incentives of asset managers.

EMH and the Status of Fund Management (Financial Analysts Journal, 2020)

This paper from the Financial Analysis Journal presents how and why the introduction of efficient market hypothesis changed many of the presumptions that previously existed around making money.

Gaming Performance Fees by Portfolio Managers (2020)

This paper demonstrates the challenges in creating portfolio manager reward systems. The authors argue that no compensation mechanism exists to separate skilled from unskilled investment managers solely on their return histories.