Operational Resource Centre

According to the Investment Company Institute (ICI), employer-sponsored retirement plans held assets totalling USD27.1 trillion at the end of 2018, up 12.9 per cent from year-end 2015. Of that, employer-sponsored defined contribution (DC) plans accounted for USD7.5 trillion, of which collective investment trusts (CITs) are estimated to account for 25 per cent by the end of 2020, up from 14 per cent in 2013.

In today’s environment, persistent pricing pressure, the demand of custom investment products and the rise of “institutional-style” investing across defined contribution (DC) plan segments are all contributing to the continued growth of collective investment trusts (CITs).

In a recent white paper entitled Evolution in Asset Management, SEI pointed out that 70 per cent of US fund managers are currently looking to deploy advanced analytics in the front-office. The field of data science and machine learning-based data analysis is helping to transform how fund managers think about data to gain a competitive edge. 

Investment managers stand at a crossroads today. Faced with a rapidly changing digital world, they must determine which path to take to help them transform their business models and respond to the needs of a younger generation of investors.

In this latest podcast, produced in association with SEI, Michiel Meeuwissen, Head of Hedge Fund Solutions at Kempen Capital Management, and SEI’s Ross Ellis, discuss the evolution of asset management, and in particular two key trends – vulnerable economics, and emboldened investors.

“Client services could be a key focal point going forward for how fund managers might stand out from the crowd and remain relevant,” says Ross Ellis (pictured), Vice President and Managing Director of the Knowledge Partnership in the Investment Manager Services division at SEI, when discussing the third of five trends in SEI’s latest white paper, Evolution in Asset Management.

At nearly USD8 trillion, the US defined contribution (DC) retirement market remains one of the largest – and growing – opportunities for asset managers. From 2007 to 2017, net assets grew by 67 per cent, increasing by USD3.1 trillion. 

To gain an advantage in today’s hyper-competitive world, asset managers must not only evolve their operations, but they must also discover new ways to leverage them. Managers must be operationally adept; particularly in a business that grows more costly and complex, they need an infrastructure that will equip them to better meet client needs, satisfy regulators and compete more effectively. 

When reviewing middle-office outsourcing proposals, this comment is not uncommon. However, the inclination to evaluate outsourcing by extrapolating in-house operating budgets and comparing them to outsourcing proposals is an insufficient method for determining the total value of a proposed outsourcing relationship. 

The first wave of middle-office outsourcing deals came on the heels of the the credit crisis in 2008. Given this timing, it should come as no surprise that the origin of these first generation deals was driven by cost savings. At the time, middle-office operations was viewed as a necessity but also a cost centre.