Mon, Feb 24, 2020
A A A
Welcome Guest
Free Trial RSS
Get FREE trial access to our award winning publications
Alternative Market Briefing

Fitch's view on the investment management sector remains "negative"

Friday, August 16, 2019

Laxman Pai, Opalesque Asia:

A growing cyclical and secular threat to the profitability of global investment management industry, which is exposed to late-cycle risks and business models challenged by a shift in customer demand towards passive investment products, says Fitch Ratings.

Overall, Fitch Ratings' view on the global IM sector remains "negative", though larger managers are seen as better placed to deal with the challenges and evolve and adapt, while smaller firms may be "absorbed by larger ones unless they can develop and maintain a niche market position".

"We expect the customer trend towards passively managed funds to continue," said the report.

While traditional IMs argue the case for active management, emphasizing that the rise of passive funds has been linked to rising markets, Fitch believes that there are clear secular shifts towards lower-cost passive products.

By April 2019, the total assets of passive US equity funds had reached parity with those of active US equity funds, according to Morningstar.

To counter the trend, some IMs have started to focus more on private assets, which are less prone to replication by passives. However, changes to business models do not guarantee success, and come with execution risk.

IMs' sensitivity to market factors was highlighted in 2018, after a decade of unrelenting asset price growth. Their performance suffered from declining asset values and net inflows due to investors' heightened......................

To view our full article Click here

Today's Exclusives Today's Other Voices More Exclusives
Previous Opalesque Exclusives                                  
More Other Voices
Previous Other Voices                                               
Access Alternative Market Briefing

 



  • Top Forwarded
  • Top Tracked
  • Top Searched
  1. PE/VC: Venture debt: Is it a loan? Is it equity? Is it an pportunity?, PE, VC investments in India hit all-time high in 2019[more]

    Venture debt: Is it a loan? Is it equity? Is it an pportunity? From Forbes: Venture Capital is usually the default option for fast-growth startups looking for a cash injection, thanks to our willingness to take risks in return for equity, and with no need to pay anything back - at least

  2. Other Voices: Evolution of shrinking hedge fund fees - what do investors and managers need to know?[more]

    By Don Steinbrugge, Founder and CEO, Agecroft Partners (DonSteinbrugge@agecroftpartners.com): Hedge funds fees remain under extreme pressure across the industry. This strong trend is driven by declining return expectations from investors, inc

  3. PE/VC: No handshakes, no deals: Silicon Valley VCs hit pause on China, US private equity funds swoop on UK for cheap deals[more]

    No handshakes, no deals: Silicon Valley VCs hit pause on China From Nikkei: Venture capital companies in Silicon Valley are not taking any chances when it comes to the coronavirus outbreak. "Due to the Coronavirus, No Handshakes Please. Thank You," reads a sign on the office doors of An

  4. COVID-19: Investors track ships, chase rumours to get edge on COVID-19 risks, Coronavirus risk puts the bull run on pause, China was wise to let markets stumble[more]

    Investors track ships, chase rumours to get edge on COVID-19 risks From Reuters: As investors crunch numbers to determine how the coronavirus will hit China's economy, hedge fund manager Nathaniel Polachek has tied much of his outlook to the fate of a ship anchored near Weihai, China.

  5. Bruce Berkowitz is back!, Coatue's new quant fund lost money in the fourth quarter[more]

    Bruce Berkowitz is back! From Institutional Investor: Famed value investor Bruce Berkowitz has hit hard times over the past decade, with big bets on losers like Eddie Lampert's Sears Holdings. In fact, over the past 10 years, his Fairholme Fund's annualized return is only 4.89 percent -