Asset management is facing unprecedented times. A volatile economy, inflationary pressures and fears of a looming recession are forcing organisations to rethink their portfolios as they navigate the new normal.
As central banks raise their interest rates aggressively, investors are experiencing a crisis of confidence as they choose to remain cautious, gravitating towards managers that they already know and trust. In an increasingly volatile market, business leaders are pioritising transparent, efficient investments that can promise greater returns. Distruptive tech is adding to investment complexities as global geopolitical turmoil threaten to undo years of financial progress and growth.
In this report, we highlight the key strategies and solutions that leading asset managers can embrace as they gear up for volatile market conditions.
Find your niche
Opportunities in asset management may look different for you depending on where you stand on the AUM spectrum.
For bigger players, the crisis of confidence experienced by investors has led to steady inflows. These players are primarily focused on market demand and recent trends, channeling their attention on ETF and private market investments. They are also using resources and data analytics to develop and expand new offerings and capabilities in a bid to stay ahead of investor trends.
Fundraising may be more of a struggle for smaller players, but they also have big opportunities to stand out in the current market reorganisation. Investors are increasingly looking for highly personalised services and offerings. They want specialist capabilities to take their businesses to the next level. Managers from smaller firms and from niche sectors could – with the right focus and effort – create a compelling value proposition for investors.
Assessing your assets: 5 key takeaways
From anticipating market trends to exploring new tech, here are 5 strategies asset managers can adopt as the navigate the new normal.
Client needs and expectations are changing rapidly, so are their investment goals. Consider how you can work more closely with intermediaries to deliver personalised strategies and identify and predict future trends for your clients. Think about the types of products and solutions they may want require the future, as well as the type of information they may require.
Climate change is threatening the survival of today's generation. And asset managers are perhaps in a unique position to use their investment decisions to achieve real world impact and to drive positive change by helping their investee companies reduce their environmental footprint and develop greener products and solutions. Those who articulate their purpose to society and investors can differentiate themselves amid a highly competitive and value-driven market.
Communication is a key enabler of purpose and client-centricity. Gone are the days of quarterly investor communications and compliance reports. Today’s leading asset managers are continuously communicating with their stakeholders on a wide range of topics. This is helping them build trust with their customers, employees and regulators. As the past few months have revealed, open and transparent communication between firms, managers and their investors can be critical in managing a crisis.
The shift in client expectations and sagging margins is putting pressure on current business models. An affinity towards value-based products and services centered around clients suggests that new business models will be needed to meet new demand. At the same time, asset managers should be looking for opportunities – through technology, process or outsourcing – to improve operational efficiency and business flexibility.
Technology can deliver significant value to asset managers in today’s digitised environment. Carefully consider how technology, culture and people can intersect seamlessly to ensure that your tech investments are creating a positive impact and value for both clients and employees.
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