The Evolving Investment Management Landscape

The ground of the investment landscape is shifting despite positive indicators suggesting that the investment industry has resumed a traditional recovery narrative. Ken Yap, Senior Director, Research Analytics for Cerulli Associates told attendees of the FIMM Annual Convention 2017 that there are clear indications that business won’t be ‘as usual’ moving forward.

Several factors contribute to this shift, not the least of which is the continuing volatility in the global financial markets. According to Yap, the macro perspective may not be as stable as rising markets in the first half of the year seemed to suggest. “The market has been rising in the first half of 2017, but if you look at the past few years, it has been very volatile; and indeed, we are still looking at fairly turbulent times marked by icy [global] politics,” he said.

“At the same time, interest rates remain fairly low in the region and central banks are either trimming or keeping rates at status quo. Taken together, we have a very volatile The Evolving Investment Management Landscape market in a low interest rate environment which present challenges in terms of selling funds and investing into products.”

While market observers have been warning of a challenging investing environment these past few years, one key difference according to Yap is that the fund managers themselves are starting to acknowledge the risk. A Cerulli survey conducted in 2017 showed that asset managers have identified the top investment risks in the near-term to be market uncertainties and the low investment appetite seen across the region.

What is suggestive, however, is the fact that over the past five years, these same managers have identified the distribution framework and regulatory structure as their top risk items. That they now identify the macro environment as their key risks indicate that there has been a real change in the investing environment, and will become a priority for them going forward.

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