Investment Management Trends for 2020

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The asset management industry is anticipated to face numerous transitions in the upcoming year. Right from operating landscape to competitive edge, 2020 will be a year of significant changes for asset managers. 
Some of the key changes envisioned by thought leaders for the asset management industry from investment research are highlighted below: 

Alternatives will grow to be more passive 

The dissolution between alpha and beta will extend beta market exposure and accelerate investment allocation to passive products. By 2020, 35% of industry assets will comprise of alternatives and passive products. 

Upsurge in assets and transition in investor base  

Currently, the volume of investable assets is $64 trillion today, which is predicted to increase to $102 trillion by 2020. The three factors that’ll govern growth in assets will be the government-incentivized shift to individual retirement plans; the increase of high-net-worth-individuals (HNWIs) from emerging populations; and the growth of sovereign wealth funds (SWFs). 

Pressure will continue to prevail 

The rise in costs will go hand in hand with the rise in assets. Compliance costs will remain high and commercial cost pressures will grow as firms expand their distribution network. Investment in technology and data management will no more be a choice to keep pace with regulation and reporting standards.  

Emergence of new global managers 

The formation of new regional blocks and fund platforms will impact costs and efficiencies vastly. Economies of scale will be of prime importance leading to the emergence of alternative managers across channels and remote areas. Branding and talent promotion will be the limelight to establish and maintain a competitive edge. 

Transparency at its peak  

All investment activity and product will be completely translucent, leaving no room for non-compliant managers to run away. Subsequently, by 2020, real-time access to portfolios cross-referenced to market data will be handy for regulators and only the plain vanilla managed account will stay away from regulatory reporting.  

Big Data will remain the key to actionable insights 

Big data has made it plausible to reduce the information gap in investing. Assessing the surplus data to unveil human behaviour by mapping patterns across search data, social media, text, image, and video, has helped investors gain rich contextual intelligence about their consumer’s sentiment. This will continue to evolve will the augmentation of IoT and the advent of AI. 

Chief Digital Officer to cater digitization 

With digitization progressing rapidly and data mining becoming an essential process not only to identify potential clients but also to drive customer engagement, optimize operational efficiency, improve tax reporting and regulatory, almost every global asset manager will be reporting to their chief digitization officer (CDO) by 2020. 
Article source: Jency Jane:goarticles.com
Location: Indian Ocean

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