A look at changing investment preferences. What are the emerging trends?

James Goad

Asset ManagementAsset ManagementBehavioursBrandEmerging MarketsEngagementExperienceJourneyTrends

Areas the delegates were interested in hearing about included; A move to outcome investing, product/solution innovation, how firms are responding to change, active vs passive, emergence of ESG/sustainability and regulatory influence.


  • Reviewing current trends
  • Future trends 
  • Drilling into key areas 

Key issues and challenges

Three current trends are:

  1. Shifting investment preferences, the growth of passives – a long way still to go. Could this trend reverse?
  2. Sustainability / ESG
  3. Fees - will they go altogether? Are they morally indefensible? 

Three future trends

  1. Politics - Brexit, rise of populism, interstate rivalry
  2. Change in demographics - ageing population, diversity in the workplace, migration
  3. Technology – need to invest more into it, really get to learn the concepts 

Drilling into key areas around 1) the active v passive debate and 2) ESG: 

1 . Active/passive debate

  • New money is going into passive. As an active player, you must pick your space and deliver
  • Several multi-asset managers are using passive investments as ‘building blocks’ but know when to get out. Concern that individual investors do not have this knowledge  
  • Is there too much choice in the active management space? Could this be putting investors off?
  • The need to directly engage with clients (end audience). Is there current impetus? There is certainly a need for education but d2c market still relatively small and therefore not seen as a priority for boards
  • People are prepared to pay fees for the winners 

2. ESG – A hygiene factor?

  • What and who is driving ESG - reporting demands (legislation) and Institutional pressures?
  • Articulating ESG is an issue – differing philosophies and definitions of what it is
  • Problems with ‘greenwashing’
  • ESG should mean better long-term performance
  • Engaging investors on ESG – coming through on institutional side and are we at the cusp of interest becoming real in IFA market
  • Looking at how it is being integrated – there is no need for ‘ESG’ funds per se.

Conclusions and solutions

  • Reason to revisit the purpose of Asset Management and the need for the industry to think more about future needs
  • AI continues to be a huge issue and will reshape active management in the future – potentially providing huge opportunities
  • Reasons why it may not be evolving as fast as it wishes to is around the pressure for continuity, need for reassurance, ability to differentiate, risk of failure
  • Currently the Asset Management industry relies on other sectors for development and these firms do not always have AM interest at heart