Reinventing asset management
2021 has already been a remarkable year of reinvention in the asset management industry, after the disruptions and unpredictability of the last year.
On the whole, asset managers have proved their resilience in the face of volatile markets, bouncing back with a strong performance in the last quarter of 2020 and the first half of 2021. By the end of 2020, PwC found that global assets under management had grown to USD110 trillion and counting.
But most of all, the pandemic caused a major acceleration in changes that were already taking place in the world of asset management, a sentiment that has been echoed by many of the award-winning firms.
The winners of Institutional Asset Manager Awards 2021 have each spearheaded the industry’s efforts to reinvent itself, and proved their own ability to shine during one of the most turbulent episodes in recent history.
Albourne, the winner of Best Investment Consultant, found itself well-positioned to capitalise on these changes. The firm specialises in alternative assets, which won big last year as institutional interest in hedge funds and private markets grew.
“The starting point is the general concern around the expected returns of ‘traditional’ assets, equities and fixed income, which leads to a consensus desire to increase allocations to alternatives,” said Albourne’s CEO John Claisse, speaking about his recent discussions with CIOs of client firms.
“The most common asset allocation challenge or concern right now is inflation, leading to an increased focus on infrastructure, reflections on the expectations for large technology allocations, energy and commodity strategies, as well as the pros and cons of holding TIPS, gold and cryptocurrencies,” said Claisse.
From the perspective of inflation-hedging, institutional investment into cryptocurrencies such as bitcoin took off over the past year, with major asset managers including BlackRock, Ruffer, and One River entering the market.
“The crypto market is still in the first inning of institutional adoption,” said Asen Kostadinov, head of strategy at Copper.co. The firm won Best Digital Assets Service Provider. “It is going to take time for crypto to truly solidify its status as an alternative asset class given the prevalence of complexities and risks beyond ‘volatile prices’.”
Market volatility increased the demand for data and analytics across all asset classes and strategies last year.
“Rapidly moving markets, continued fee pressure, and changing client demands has resulted in asset managers looking to new sources of data and solutions in an effort to differentiate their investment strategies and uncover alpha,” said Teddy Kahn, Global Head of Investment Management at S&P Global Market Intelligence, winner of Best Data & Analytics Provider.
Digital continues to reign supreme after asset managers switched to remote working last year, and this has become an important source of competitive advantage.
Andrew Morgan, chief revenue officer at TS Imagine, said: “[Asset managers] have to think about the best ways to future-proof their business, and clearly a digital strategy has to be front-and-centre, right up there with their alpha generation capability.”
TS Imagine won Best Risk Management Software Provider. The firm is currently processing a merger between TradingScreen and Imagine Software, through which it intends to create a SaaS-native “digital stack in a box” for clients.
The need for data is nowhere more apparent than in the realm of ESG and responsible investing, a topic that has grown enormously in the minds of investors over the past year.
Award winner Albourne conducted a survey last year that showed that 51 per cent of respondents already take ESG into account when investing and a further 19 per cent intend to. This is up from 36 per cent and 14 per cent respectively in 2018.
“ESG is no longer a nice-to-have, but a must-have,” said Alexandra Mihailescu Cichon, Executive Vice President of Sales and Marketing at RepRisk. The firm won Best ESG Data Provider. “Now more than ever, it has become clear that ESG risks can translate into bottom line compliance, financial, and reputational impacts for companies – and how crucial it is that the datasets used for decision-making are reliable, timely, and of high quality.”
“Whereas many firms have long been talking about responsible investment, it’s no longer enough to say you are doing it. Institutional allocators now want to see the actions that investment firms are taking to make a difference, and they want to better understand the ways in which firms are taking differentiated approaches to making smart portfolio decisions and steering their businesses through considerable change,” said Mike Geller, partner at Prosek Partners, winner of Best PR & Communications Firm.
Sasha Jensen, founder and CEO of Jensen Partners, outlined how the increased focus on ESG issues such as diversity and inclusion is changing asset managers’ recruitment priorities. Jensen Partners won Best Recruitment Consultant.
“We’ve seen demand for diverse candidates grow across alternative assets to the point where many firms are creating diverse candidate pipelines and dedicating significant HR resources to finding talent that better represents the communities and clients they serve,” said Jensen. n