As we welcome the new financial year, now is the time to revisit your business strategy. For the financial world, 2018 was a year of unpredictability and volatility across all areas of the market. And while uncertainty was felt across every spectrum of the industry, the asset management market has been thriving. Here, through her extensive research and expert knowledge of the asset management industry, leading quantitative consultant Karysca Gill tells us what trends will be shaping the industry this year and beyond.
Greener Investment (ESG)
The planet is paramount this year, with an increasing number of companies becoming more socially conscious when making investment decisions. Standing for environmental, social and governance, ESG standards are becoming adopted by an increasing number of organisations. Take Trillium Asset Management, for example, which has prohibited any investments in firms that receive more than 5% revenue from nuclear weapons. Green investment is a relatively new trend, but one that shows no signs of slowing down if companies want to stay relevant in our age of planet preservation.
Exchange-traded funds (ETF) are becoming more prevalent in both UK and US asset management firms, with approximately 35% of assets expected to be ETFs by 2020. With ETFs, you can purchase a diverse collection of assets that are cheap to run but still offer maximum flexibility when traded. With all this in mind, it’s no wonder that an increasing number of asset managers are considering the move to this type of investment.
Quantamental investment will continue to grow, as senior leaders begin to realise the huge revenue potential in combining quantitative analysis with fundamental investment practices. Whereas before quant analysts sat separately from portfolio managers, a two-pronged approach is proving fruitful for many companies - an early adopter was BNP Paribas Asset Management. By combining statistical and mathematical modelling with informed investment decisions, the French asset management company was able to create MAQS (Multi-Asset Quantitative and Solutions), a new group with around 130 people collaborating on quant investment and fundamental active management. Although not a novel concept, Quantamental investing is becoming much wider appropriated across asset management.
And of course, no set of trends would be complete without the mention of technology. There has been a steady increase in the number of firms shaking up their infrastructure as technological advances continue to disrupt the finance world. The growing presence of Artificial Intelligence has provided an opportunity for firms to analyse mass amounts of data, which will relieve consequential pressures that came as a result of tougher data regulations. Firms have also started to harness the power of Machine Learning, Big Data, Natural Language Processing and image recognition – like BlackRock, for example. The corporation has been using these methods to grow its Systematic Active Equity investment team for over a decade.
It’s a time of great innovation for the finance word. And while 2019 will not come without its challenges, it also brings a year of huge opportunity for the asset management industry. If you are not already doing so, now is the time to embrace industry change and implement these top trends in your business strategy.
Of course, to do this you’re going to need new talent – and that’s where we come in. At Oliver James Associates, our team of specialist consultants is here to guide and assist you in your search for talented individuals. Our unique approach enables us to reach 60% more candidates than can be found online, so you can rest assured that we’ll find you the best person for your organisation. If you would like to discuss your opportunities, get in touch with Karysca Gill today at firstname.lastname@example.org