Investment Management Industry: Checking the Temperature

Consolidation Trends Show That For Managers, 'the World is Not Enough'

During the global pandemic, market consolidation has taken on a fresh urgency. For some commentators, this is further evidence that for asset managers, 'the world is not enough' and bigger is always better. Whilst some criticisms of the industry might be valid, there are many good reasons why consolidation can be a positive – from new asset class expertise to new products born out of firm complementarity and greater economies of scale. A recent survey by State Street revealed that 50% of asset managers say it is either ‘somewhat’ or ‘very’ likely that they will undertake M&A or other consolidation activity over the next year. However, consolidation isn’t the silver bullet that some market players might be yearning for.   The white papers in this list, curated by the Savvy Investor Content Team, delve into a range of other equally important industry issues. For example, papers by PRI, Northern Trust and Man Group deal with the issue of selection (and de-selection) of fund managers. Northern Trust’s paper on Risk considers some of the underlying components that impact a portfolio’s ability to drive positive returns, while SimCorp, Jacobi and Callan take on other topical industry issues namely data management, retirement savings risk, and the impact of COVID-19 on how firms operate.

FEATURED PAPERS

Consolidation in the Asset Management Industry (State Street, 2020)

Consolidation is an important and current theme within the investment industry. Many firms are considering M&A deals and with the arrival of COVID-19, that's taken on a fresh urgency. This report by State Street examines these priorities through the lens of strategy, operating transformation, culture, and data.

The Risk Report (Northern Trust AM, Nov 2020)

This 19-page report by Northern Trust is a multi-year, aggregated analysis of over 200 global institutional equity portfolios. It examines some of the underlying risk components that impact a portfolio's ability to achieve its intended results.

Growth Readiness Study 2020 (State Street)

State Street's Growth Readiness Study charts transformation across three key areas of the investment industry – investments, operations, and distribution. This latest iteration presents the results of a survey conducted in September and October 2020.

Rethinking Market and Reference Data Management (SimCorp, 2020)

This SimCorp paper examines some of the main factors that influence how buy-side firms currently think about data; versus how they should be thinking about data.

Retirement at Risk (Jacobi, 2020)

The retirement savings universe has been simplified by TDFs (target-date funds) and other lifecycle investment products. But what risks remain? And what happens when the glidepath is not enough? This paper by Jacobi delves into some of these important questions.

MANAGER SELECTION

Investment Manager Selection Guide (PRI, 2020)

In this report, Principles for Responsible Investment offers asset owners guidance on how to address RI principles and ESG factors in their relationships with their respective investment managers.

Investment Manager Monitoring Guide (PRI, 2020)

This guide by Principles for Responsible Investment seeks to assist asset owners with developing a monitoring process for their respective investment managers. The guide acts as a helpful framework (with an initial list of questions) to be included as part of the reporting and monitoring structure.

Investment Manager Appointment Guide (PRI, 2020)

This guide has been produced by Principles for Responsible Investment. It aims to support asset owners in their selection of investment managers.

Choosing Investment Managers (2020)

This academic study explores how plan sponsors chose asset management firms when delegating $1.6 tn in assets between 2002 and 2017.

Selecting Fund Managers and Consultants - What Do Trustees Look For? (Aon, 2017)

How do pensions trustees approach the difficult task of manager selection? What are trustees looking for in a fund manager? This white paper is a joint effort between Aon and University of Leeds.

Too Many Equity Managers, Mediocre Outcomes (Northern Trust AM blog, 2020)

Hiring too many fund managers can cause unexpected outcomes. In this blog post, Northern Trust's Michael Hunstad, PhD explores this phenomenon.

You’re Fired! When Do You Sack the Fund Manager? (Man Group, 2020)

Sacking an investment manager is complex and expensive. So what type (and size) of drawdown should cause you to risk changing a manager? This Man Group paper provides some important and fascinating detail.

INDUSTRY OVERVIEW

How Investment Managers are Coping With COVID-19 (Callan, Sep 2020)

It won't come as a shock to anyone that COVID-19 and the various national lockdowns have greatly impacted the way fund management firms operate. Callan conducted a survey of fund managers to assess how their firms are approaching the so-called 'new normal' – working from home, office closures and reopenings, meetings, business travel, etc.

North American Asset Management in an Era of Unrelenting Change (McKinsey, 2020)

McKinsey & Company's deep dive into the North American asset management industry finds an industry in structural transition.

Global Wealth Management Report 2020 (Oliver Wyman/Morgan Stanley)

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 the C-suite.

Technology Redefines Relationships With Asset Management Clients (Deloitte)

This 24-page white paper from Deloitte discusses the future impact of technology upon global fund management businesses.