Stay ahead of the curve with these asset management trends.
Continuing market volatility has many investors spooked. But professionally managed assets grew for a third consecutive year, suggesting that there’s still plenty of opportunity for those who know where to look.
Those in the know are turning to innovative data strategies, new ways of reporting and disclosures, and an increased focus on digital transformation.
We cover 7 top asset management trends to watch over the next year. We look at how firms manage their workforce and their approaches to data and alpha generation, and we examine how the industry is changing in response to client and governmental demands around sustainability, reporting, and fiduciary responsibility.
7 Asset Management Trends
1. A strong data strategy
Managers are turning to advanced analytics and machine learning technologies to help them make sense of a deluge of data. This allows them to keep up with the competition, better understand their portfolios and make data-based decisions that can improve performance.
And no, this has nothing to do with quant funds. This is about empowering human expert decisions with the help of technology instead of blindly following algorithms.
2. Improved investor reporting
As investors experience increased anxiety around the security of their investments, there’s also an increasing demand to know where their money is going and how it’s performing.
Asset managers are responding by beefing up reporting around performance and operations. Data analytics tools and services which offer intuitive visualisations and automated reporting are in high demand to relieve manager workloads and provide transparency to investors.
3. End of the 60/40 portfolio:
The traditional 60/40 portfolio (where 60% is invested in stocks and 40% in bonds) has been losing steam for a while now. Investors are looking for more diversification and managers are responding with products that offer exposure to alternative assets such as private equity and hedge funds.
4. ESG reporting and disclosures:
Sustainability is no longer a niche concern. Investors want to know that their money is being put to work in companies and industries that are committed to making a positive impact on the environment and society.
ESG (environmental, social and governance) reporting has also become mandatory for listed companies in many jurisdictions and asset managers are following suit by providing greater transparency around the ESG aspects of their portfolios.
For example, in May, the EU rolled out the Sustainable Finance Disclosure Regulation (SFDR) with the aim of encouraging investment in social or environmental projects, standardise ESG reporting and prevent greenwashing. SFDR level 2 will be implemented from 1st January 2023.
5. Yet more regulations
ESG reporting aside, there are yet more regulations due to be rolled out in the coming months putting an increased burden on asset managers to fulfil all necessary administrative requirements for regulatory compliance.
In September 2020, the European Securities and Markets Authority introduced guidelines on liquidity stress testing. Under these guidelines, fund managers must now stress test assets and liabilities and stress test how they would manage a fund during a period of severe market disruption to combat liquidity risk.
From January 2023, all managers of a UCITs (Undertakings for the Collective Investment in Transferable Securities) fund will need to provide retail investors with a PRIIPs Key Information Document (KID). The KID will include information on the fund’s objectives, costs, risks and performances.
All of this is putting increased pressure on asset managers to have the right technology and processes in place to meet their regulatory obligations.
6. Digital transformation
To ease this burden, asset managers are turning to digital transformation. This involves automating manual processes, adopting artificial intelligence (AI), and using cloud-based technologies to improve efficiencies and compliance.
Digital transformation isn’t a new concept, but the pandemic has pushed it to the top of the agenda for many asset managers. The need to support remote working arrangements and meet the increasing demands of digital-savvy investors has meant that firms have had to invest in digital transformation at an accelerated pace.
7. Talent retention strategies
Across the board industries are struggling with talent retention and the asset management sector is no different. The lure of fintech firms and other financial services organisations offering attractive working conditions is proving difficult for asset managers to compete with.
To combat this, asset managers are turning to more agile working models, offering greater flexibility around working hours and locations. They are also looking at ways to improve work/life balance and offering more opportunities for professional development.
The asset management industry is bracing for further market volatility. We cannot ignore the threat to global markets that exists from geopolitical tensions, but we can take heart from the fact that professionally managed funds continue to grow and look at how managers are adapting to change.
As we look ahead to the next 12 months, firms will need to focus on a number of key areas in order to stay ahead of the curve. These include a strong data-based strategy, offering transparent reporting to investors, complying with increasing regulations and improving working conditions to attract and retain talent.
Get Started with Symanto
Investors are looking for asset managers that can provide them with a clear understanding of the risks involved in their portfolios and how these are being managed, as well as the opportunities to generate alpha.
In order to meet these demands, asset managers need to have a strong data strategy in place. This will involve collecting data from a variety of sources, including social media, newswires and alternative data sets. It also requires the ability to analyse this data and draw insights that can be used to inform investment decisions.
Symanto offers a range of customisable solutions that can help asset managers to develop and communicate a strong data strategy. Our solutions are designed to help you collect, and analyse data from a wide variety of sources and condense them into actionable and uniquely relevant insights.
Our reports deliver both high-level insights while enabling you and investors to intuitively explore data on a granular level for transparency, precise understanding, and confidence in the results.
To learn more about how Symanto can help your firm, get in touch today.