Asset Management: Changing Dynamics In Industry Trends

Asset Management: Changing Dynamics In Industry Trends
lecho0047 / Pixabay

RBC Capital Markets analysts Eric. N Berg, Kenneth S. Lee and Bulent Ozcan present their take on the changing dynamics in the asset management space.

Play Quizzes 4

Asset Management: Changing Dynamics In Industry Trends

The analysts identify key industry trends, and what the changes could mean for asset management companies rated by RBC, based on the views expressed by a panel of industry asset management leaders speaking at the RBC Capital Markets’ Financial Institutions Conference.

This Too Value Fund Explains Why Turkey Is Ripe For Investment Right Now

TurkeyThe Talas Turkey Value Fund returned 9.5% net for the first quarter on a concentrated portfolio in which 93% of its capital is invested in 14 holdings. The MSCI Turkey Index returned 13.1% for the first quarter, while the MSCI All-Country ex-USA was down 5.4%. Background of the Talas Turkey Value Fund Since its inception Read More

Index-based investing

Index-based investing was first brushed off by the actively managed funds industry as just another new kid on the block. Later, after index-based funds began enjoying strong flows, they were noticed, but yet not acknowledged as a threat. But now, for the first time, analysts discern that the active manager industry has begun to view passive investing as a real and substantial challenge to their business.

In fact, the industry now appears to agree that index funds and ETFs could really ‘move the cheeses’ for many active managers who stick to their comfort zones and refuse to acknowledge that these products could become mainstream products.

The alternative, said panelists, is to specialize, or to become “multi-boutique” businesses.

Yet low-fee passive management is not the only business model

Encouragingly, the panel did not think that low fees were the panacea. The analysts noted that participants were confident that high-fee products could exist alongside the plain vanilla offerings. Examples cited were of a WisdomTree Trust (NYSEARCA:ELD) product that charged an 80bps fee, and Virtusa Corporation (NASDAQ:VRTU), which offered the services of highly specialized managers and pricing reflecting that fact.

Alternative goes retail

An emerging trend is that of the hitherto exclusive alternative strategies arena being thrown open for participation to the retail investor. An example of such ‘democratization’ is The Blackstone Group L.P. (NYSE:BX)’s joint venture with Fidelity to create a mutual fund able to invest in hedge funds—Blackstone Alternative Multi-Manager Fund Class I (MUTF:BXMMX).

No longer will ‘alternative’ remain the playground only for the institutions or the very rich.

Asset management abilities

RBC is clearly impressed with the abilities of selected asset managers to weather these winds of change in the industry. BlackRock, Inc. (NYSE:BLK) is cited for its active, problem-solving approach, whereas alternative manager The Blackstone Group L.P. (NYSE:BX) gets praise for its ability to bring troubled companies back into shape.

RBC reiterates Outperform ratings for these asset management companies:

BlackRock, Inc. (NYSE:BLK)

Eaton Vance Corp (NYSE:EV)

Fortress Investment Group LLC (NYSE:FIG)

Invesco Ltd. (NYSE:IVZ)

Och-Ziff Capital Management Group LLC (NYSE:OZM)

The Blackstone Group L.P. (NYSE:BX)

Updated on

Saul Griffith is an investor in stocks, commodities and forex, writing under a pen name. Saul has top accounting qualifications and extensive experience in industry and the financial markets. He also has an abiding interest in breaking news that could be a harbinger of new trends and give insight into an instrument’s potential for providing value, growth or yield.
Previous article Jobless Claims ‘Beat’ Forecast Due To Backlog Of Unprocessed Claims
Next article China’s High Rollers To Cut Back Macau Spending

No posts to display