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Four critical calls for the 'seismic' shift in asset management

by Dylan Lobo on Jul 01, 2014 at 13:33

'There has been an institutionalisation of the process of the fund-buying process,' said Henderson global distribution head Phil Wagstaff (above). 'More money is in the hands of few people, and often the use similar models to select funds...In this way you end up with a "winner takes all" market.

'Last year around 90% of all UK fund flows went into around ten funds [funds of funds/platforms]. If you have one of those funds you can make hay, but the rest will be on the sidelines.'  

The EIU interviewed a number of senior executives at asset managers and identified the following four key industry trends.

1) Distribution

Asset managers are faced with the choice of building a direct retail business or strengthening their intermediated processes.

Schroders head of institutional Adam Troiano believes that forging partnerships with insurance-owned platforms will be a key area of growth for mid-sized asset managers given insurance companies are increasingly outsourcing to and partnering with fund firms.

Wagstaff does not see much value in targeting the direct market. 'Our strategy is as a branded manufacturer, not a platform provider. While we have direct clients, it is not our intention to offer them the full functionality of a platform to attract new direct clients.'

He added: 'We are building long-term strategic partnerships as part of guided architecture offerings for key distributors, including third-party and sub-advised.'

Troiano also believes geographical diversification is key. 'We do business in 30 countries. We have a domestic business in each of those countries as well as selling international products. Therefore, no one consultant dominates our overall revenues.'

2) Products

Diversification also extends to product development points out Jörg Ambrosius, senior vice president at State Street Global Advisors. 'We see asset managers going into new alternative asset classes, which requires investment and know-how.'

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