The CEO of a new generation of asset managers ushers in the industry’s ‘golden decade’, warning that it is becoming increasingly difficult to weather the competing pressures of markets, regulators and politicians. I called.
“The demands on asset managers are clearly becoming more complex,” said Ali Dibaji, CEO of Janus Henderson. We want more, and our clients’ clients want more from us.”
Katie Koch, CEO of Los Angeles-based TCW Group, said, “Asset managers are facing challenges such as evolving regulation, the shift of investment opportunities from public to private markets, the globalization of opportunity sets and the “We are facing increasing complexities related to the recent politically strained portfolio management environment.” .
After a decade of zero interest rates and quantitative easing that pushed stock markets to record highs, investors are grappling with the challenge of regime change for both inflation and interest rates.
Yie-Hsin Hung, chief executive of State Street Global Advisors, said:
The Financial Times has identified at least 18 chief executives who have held the reins of large asset managers since early 2022.
Investor outflows and rising costs, combined with significant declines across markets, are increasing pressure on active asset managers that have battled the march of passive investing.
Investors withdrew $530 billion from investment funds (excluding short-term money market funds) around the world last year, according to data provider Morningstar.
Asset managers’ earnings are supported by the fees they charge on assets under management, and the decline in assets puts pressure on their return on assets (a key measure of an asset manager’s profitability), especially for less efficient players. I’m here.
“The golden decade of asset management is over,” DWS CEO Stephen Hoops said, adding that investors are now “not all going up and up,” but “at a cost.” We are facing a market environment where
Last week, BlackRock, the world’s largest asset manager, warned that a “traditional investment approach” of 60% equities and 40% bonds would not provide investors with sufficient returns over the long term. He called on people to spend time on the strategies that have been the cornerstone of many investors. Over 30 years as an asset management company.
Invesco CEO Andrew Schlossberg said, “The complexity of today’s markets, not just equities and bonds, but consumer behavior, economics, geopolitics and regulation, is creating a lot of volatility and uncertainty. I am producing it,” he said. “So it’s difficult to create a long-term business strategy, and I think it’s going to be for a while.”
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Asset managers are responding to profitability pressures by diversifying their businesses, adding higher-margin products such as private assets, and sometimes targeting new client types and geographies through acquisitions. We have responded. As a result, their business models have become increasingly sophisticated and difficult to manage.
Rob Sharps, CEO of T Rowe Price, said: Customers now access her T Rowe through multiple channels, including direct access to brokerage platforms, through advisors, or to purchase specific products such as substitutes. “Then we’ll do it all over the world.”
He added: “In particular, the proliferation of regulations and differing customer preferences for vehicles, strategies and structures in the end market make it a complex business.”
Increasingly fragmented and complex regulation is another concern, especially regarding the rapidly growing investment sector based on environmental, social and governance factors. The asset manager is trying to balance the demands of a highly interconnected investment industry with the withdrawal from globalization and the increasingly politicized nature of his ESG in the US.
“Regulation is becoming more complex,” said Matthew Beasley, CEO of Jupiter. We have also confirmed that there is a difference in
For example, European regulators have taken the lead in defining standards for ESG investing with sustainable financial disclosure rules aimed at increasing transparency and preventing greenwashing. However, the UK is negotiating its own rules and may approach the EU differently in the aftermath of Brexit, with the US Securities and Exchange Commission preparing rules on her ESG disclosures.
Karin van Birdwijk, CEO of Dutch asset manager Robeco, said that with the demand and thus supply of ESG products, “the risk of greenwashing is becoming increasingly prevalent. It could undermine credibility across the industry…and ultimately lead to more regulation.”
In the US, we’ve found asset managers like BlackRock and Vanguard to be lightning rods on both sides of the political spectrum. Republican politicians have attacked them over his use of ESG metrics, claiming they are hostile to investing in fossil fuels, but Democrats are doing more to fight climate change. criticize them for not
Meanwhile, asset managers are embroiled in a war to acquire talent, especially in areas such as private equity, technology and sustainable investing, seeking to continue investing in businesses to stay ahead of their competitors. is.
Naim Abu Jaudeh, CEO of NY Life Investment Management, said:
“And our pressures for regulation, compliance and all the requirements mean business is getting tougher . It costs a lot of money.”
All CEOs agreed that the future facing investors today is very different from that of their predecessors decades ago.
To navigate this more complex environment, asset managers “will have to work harder and be more innovative . . . said to
“We will increasingly need broader relationships and resources, globally distributed and amplified by better technology, to generate ideas, raise deals, build portfolios and create value.” He said. “These are no small investments.”
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