Fund fees are falling. A few years ago, new UCITS equity funds levied a mean average of 1.59% - but it's since fallen to 1.21%*.That's cause for optimism – and opportunity.
When you can charge less for the same expertise you need to look at other sources of revenue. Investment management businesses have plenty of other skills: quantitative models, tactical asset allocation, solutions design, model portfolio services, risk management tools and manager and security research are all clear candidates for commercialisation.
That supply is matched by demand: there's a growing market for unbundled services from asset owners that have in-sourced asset management. As pension funds manage more of their own money they need more of the services that make efficient management possible.
This opportunity should transform the asset management industry and it's reasonable to expect more service unbundling in 2020. We're also likely to see four other things.Customised client solutions get cost efficient
Most asset managers customise solutions for sophisticated clients. But many have done this with legacy technology that doesn't integrate the design, client engagement and portfolio management processes. They can't row back on client customisation – so they'll invest in making it more cost-efficient with smarter, more bespoke technology.More tech in the hands of fund sales teams
We know half a dozen international asset managers that have moved beyond factsheets and PowerPoint. They use creative tools that connect their capital market projections, asset allocation frameworks, products and an ability to proxy the client's portfolios. This is twenty-first century fund distribution – focused on client engagement – and less product push.Integration, not siloes
Multi asset portfolios have complex internal ecosystems. With separate teams for asset allocation, manager research and security selection – multiplied by asset class – they're supported by multiple portfolio risk systems, tools and processes. This is unsustainable and we're now seeing uniform risk factor frameworks that integrate bottom-up and top-down investment process.Spreadsheets are dead – long live no-code tech!
It's hard to imagine a future in which spreadsheets play a central role. Their inflexibility poses such governance and operational risk. Progressive asset managers are already adopting new types of software, that don't require complex coding, which support the rapid creation, management, governance and distribution of investment products and services.
Almost any asset management business can find a place in this future. To find out more please get in touch, or register for the next Jacobi Strategies webinar here.
*Source: ICO Global. https://ici.org/pdf/per25-07.pdf