Asset management consolidation.
Asset managers are under pressure from competition, regulation, the requirement to invest in technology and the tough economic and market environment. The need to generate a consistently strong investment performance is creating a ‘survival of the fittest’ environment.
The large US asset managers look set to become increasingly dominant as the industry further consolidates.
As boutique operators are squeezed out, it may become harder for investors to find asset managers consistently outperforming benchmarks.
Index funds may grow as active strategies are struggling to deliver investment performance; a market downturn may revive active managers.
Further regulation is likely to add to the pressure on smaller asset managers; economies of scale should help larger managers cope.
The need to invest in areas such as big data favours larger, well-capitalised players and will favour suppliers, notably in data science.
