...definitions of alpha and beta are subtly changing
The asset management industry is evolving, being reshaped and remoulded by a variety of different forces. These include the rise of indexing in a variety of different guises, the impact of technology, changing regulations, demographic change, and an unprecedented economic landscape.
In the last few months, the research team at Savvy Investor has curated some great papers on the megatrends impacting the fund management industry. Register today for free and immediate access to over 12,000 white papers.
The Rise of Indices Is Changing the Face of Investing (S&P Dow Jones Indices)
Can passive investing grow too large? What are the potential implications for active management? How have the definitions of beta and passive investing changed? As indices gain in popularity, these questions are top of mind for many market participants. This report seeks to answer those questions and takes an in-depth look at how indices are changing the face of investing.
The Future of Asset Management (Robeco, 2016)
Robeco examines the forces transforming the business of asset management, including the growth of index investment, the resulting alpha-beta separation, the rise of LDI solutions and multi-asset strategies. The industry is set on a path of lower fees -but higher costs - with a technological battle to nurture customer relationships.
Trends in Asset Management Compensation (Johnson Associates, Aug 2016)
This reports examines the key drivers of asset management incentives and bonuses in the period ahead. The trend appears to be for modest decreases across asset management, investment banking and hedge funds.
The Rise of Robo-Advice: A New Concept of Wealth Management (Accenture)
This paper by Accenture examines the concept of "robo-advice", which has gained significant attention within the wealth management industry in recent years. “Digital” wealth-management assets, including those at traditional firms, already exceed $50bn, and are growing fast. The authors see further expansion in the role of robo-advice and expect it to result in far-reaching, permanent changes in how investment advice is delivered.
The Top 10 Drivers Disrupting Global Wealth and Asset Management (EY, 2016)
The wealth and asset management industry is experiencing strong growth, mainly due to gradually recovering developed markets. Firms however also face a range of changes to the regulatory environment, remuneration model and shifting investor demographics. Firms who have previously focused on attractive asset classes with comfortable margins (such as EMs) are now challenged as many investors become more risk-averse.
Evolving Investment Management Regulation Worldwide (KPMG, June 2016)
Regulators around the world are increasing their monitoring and supervisory resources, both specifically and generally in relation to investment management. This 58-page paper by KPMG examines the changing nature of investment management regulation around the world. Since the global financial crisis, regulators have become much more prescriptive, focusing on the behaviour of investment managers. There are now signs that the activities of many regulators are intensifying substantially in order to detect and fight undesirable practices. In all this, there are opportunities for the industry to increase assets under management.
ESG - Road Blocks or the Road to Integration? (FTSE Russell, 2016)
This paper by FTSE Russell examines some of the perceived barriers to applying an ESG framework to the stock selection process, and sets out practical ways of achieving a successful integration.
How will Blockchain impact the Financial Industry? (Robeco, 2016)
There is growing agreement that Blockchain technology, though overhyped, is here to stay. This excellent report from Robeco explains the distributed ledger technology, transaction flows and the eco-system. It then examines the ways in which it might transform the asset management industry in the future.
Redefining the Asset Management Operating Model (Oliver Wyman, 2016)
Look out for the recognition of Savvy Investor on page 6 of this report! The asset management industry has recovered well since the global financial crisis. Despite that, managers remain uneasy as a result of rising regulatory costs, inconsistent delivery of alpha performance which is challenging the asset manager value proposition, and the secular shift towards passive products. To stay ahead of the curve, asset managers must be proactive and readying themselves for a paradigm shift in their operating environment, focusing on key initiatives whilst keeping a close eye on costs.
Impact of Brexit on Asset and Fund Managers (Allen & Overy, June 2016)
This paper by Allen & Overy examines the major risks and legal implications of "Brexit" for fund and asset managers. The authors analyse the possible short- and long-term impact on the sector as a whole. They discuss contingency planning, the different post-Brexit models and the difficulties associated with each one.