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Alternative Market Briefing

European asset managers wrestle with recession risk

Tuesday, November 01, 2022

Bailey McCann, Opalesque New York:

2022 has been a rough year for portfolios. As of this writing, portfolios have seen declines in the double digits. A new report from investment consultant Indefi suggests that asset managers may continue to struggle in 2023, now that recession risk has elevated. Still, there are pockets of opportunity.

Indefi notes that structured products are back in favor - at least among European asset managers and investors. "2022 issuance has picked up by 25-33% in key geographies as the higher level of interest rates expands the opportunity set beyond coupon-generating autocallable structures," the report says.

DC plans have also started to take hold across Europe which means that asset managers will have to shift away from some short-term strategies and toward strategies that offer long-term real return and capital preservation. Established markets like France may also start offering more opportunities for asset managers as more investors look for wealth management solutions.

For asset managers to be competitive across Europe, they will need to rely on renewed fixed income offerings including money markets, fixed maturity investment grade, high yield funds, and floating rate strategies the report says. As noted above there is also an enhanced structured product opportunity set including capital-protected vehicles and iCPPIs.

"Differentiating will rely on bringing to market an array of solutions and services that cater to client ba......................

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