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Laxman Pai, Opalesque Asia: Global asset management 2020 outlook remains stable amid structural headwinds, which constrain EBITDA growth.
"The 2020 outlook for the global asset management sector is stable, reflecting high-profit margins, manageable debt burdens, and sustained risk appetite among investors," Moody's Investors Service said in its annual outlook.
The outlook is supported by several factors including low expectations for a recession in 2020, continued rationalization of middle and back-office functions which will help preserve profitability, and expectations for bolt-on (as opposed to transformational) M&A activity.
"Although under pressure from fee compression, passive product substitution, and low organic asset growth, profit margins remain high for traditional asset managers, which is a source of credit strength," Moody's Assistant Vice President Stefan Kahandaliyanage said.
"For alternative asset managers, we believe business conditions including low rates, public market volatility, and robust investor demand will continue to support very strong profitability and leverage profiles across the sector," he added.
Key growth opportunities for traditional asset managers include private market investments, solutions products and services, and Environmental, Social and Governance (ESG) investment strategies.
Managers will continue to seek expansion in high-growth emerging markets, particularly China, but meaningful earnings contr...................... To view our full article Click here
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