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:
- Shifting investment preferences, the growth of passives – a long way still to go. Could this trend reverse?
- Sustainability / ESG
- Fees - will they go altogether? Are they morally indefensible?
Three future trends
- Politics - Brexit, rise of populism, interstate rivalry
- Change in demographics - ageing population, diversity in the workplace, migration
- 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