The pressure is on in 2018 as demands change, disruption prevails, and operational transformation is a must. Jenny Adams, Editor-in-Chief of FundForum defines the key trends that you need to know about to overcome the challenges and thrive.
1. Responding to the explosion of ETFs and indices
For asset owners and fund buyers in Europe the number one question is should they be investing into ETFs or not. This is no longer about the binary choice between active and passive but a more subtle and complex assessment along the continuum of risk. How do you undertake due diligence? How do you blend active and passive in the portfolio? For asset managers looking at the evolution and development of their product strategy and how to compete in this ETF environment with such dominant players - the what, how, where questions of launch and implementation are top of mind. There are many new niche opportunities in active ETFs and the boom of new ETFs are unlikely to stop soon.
2. Re-shaping, re-evaluating active management
The flip side of the burgeoning of ETFs has been a dynamic revival in active management. The question is what are the solutions for customers that justify a fee? From the application of quantum computing, AI and systematic investing to the of multi-asset or single asset building blocks how do we deliver precise solutions?
Fund buyers want new sources of alpha and sustainable returns to manage the risk of long term liabilities and short term demands. How do they incorporate new or riskier asset classes and illiquid investments into a mutual fund portfolio – while sharpening the new skills and metrics required to implement these strategies?
3. Sustainability is the new normal
One of the key shifts of 2018 is the move from ESG as HNW niche product to mainstream investment policy. Regulators and customers ask what is the value and purpose of investment management? What products and solutions are going to enable life-long financial well-being to our customers, power the economy and support the planet?
For asset owners the focus has moved to implementation with an emphasis on new metrics and performance attribution. For asset managers, opportunities for climate finance, long-term investing, infrastructure, ESG and impact solutions have never been greater.
4. AI + HI and wealth management 2.0
Regulation 2.0, Open Banking and PSD2 are transforming financial services for the end customer. To anticipate the universal financial planning platform of the future, wealth managers and asset managers need to innovate to stay in the game. New thinking is around innovation on client data analytics on suitability, client behavioural profiling and innovation in goals-based investing - crucial concepts for human and robo-distributors. For manufacturers, data analysis challenges circle around how human decision can making be improved in trading, asset allocation, B2B fund selection and risk management.
5. Data strategy for growth, scalability and business transformation
Backing up developments in wealth management 2.0, MIFID 2 is an opportunity for delivering better customer service. For CEOs and COOs the platform challenges of transforming a business from product pusher to a multi-solution provider are top of mind. How to create a data strategy to drive business growth and competitive edge? The need for innovative solutions and best back-office data practice has never been greater.