16 March 2021 | Press Releases
The first day of the ALFI European Asset Management Conference 2021 offered insights into the trends sparked by a tumultuous past year, but also opportunities ahead for both traditional and alternative assets by managers willing to grasp the themes of ESG and digitalisation.
ALFI chair Corinne Lamesch noted a 5% rise in net assets under management in the Grand Duchy, which helped take total AuM past EUR 5 trillion in the 12 months to the end of January 2021 – despite the impact of the pandemic in early 2020.
Describing the industry as being at a “crossroads”, she also noted Brexit is a reality, that globalisation is being challenged, leading to pressure on asset managers’ business models as they ponder delegation, and that margins continue to fall as the success of low-cost passive managements feed investor appetite for more.
On the upside, the industry is set to leverage opportunities out of long-term sustainable investment themes. The introduction of the EU Sustainable Finance Disclosure Regulation is just the start of a journey to provide additional clarity to investors on what exactly constitutes sustainable investment products. China and digitalisation of financial services and products also offer future hope.
Mark McFee, Director, Global Insights at Broadridge noted that active managers did well Q2-4 2020 in Europe, with investors partial to high conviction strategies. The trend could continue through 2021, albeit alongside a long-term trend towards passive. That was matched on the private investments side by data from Dave Lowery, Head of Research Insights at Preqin, who described the European private capital fundraising year gone by as “remarkably resilient”.
Carolina Minio-Paluello, Global Head of Product, Solutions and Quant at Schroders touched on the industry digitalisation theme by noting that 'client-centricity', or 'personalisation' from a product/solutions structuring point of view means the industry needs to be able to deliver more lower minimum separate accounts. Daniel Rotherford, Global Head of Product Management & Governance at HSBC Global Asset Management chimed in that “it is only a matter of time” before Amazon and others move on the asset management space, given digitalisation.
Continuing that theme, but in a different sense, Marija Skramic, Associate, Investments Infrastructure at Brookfield Asset Management outlined expectation of pending $ 1.5 trillion capital investments in data assets around 5G, fibre to the home, etc., described as 1-in-100 years upgrade cycle. Shawana Fayolle, Managing Director at Bentall Green Oak identified a commercial real estate angle to the theme: European online retailers need a lot more space.
Regulation drives much by way of industry development. However, the conference heard unequivocally a ‘No’ to ripping up Level 1 of the AIFMD as part of any review. That does leave a bit of a grey area regarding Levels 2 and 3 suggested Agathi Pafili, Head of Europe Government Relations at Capital Group, Martin Bresson, Public Affairs Director at Invest Europe, and Jeff Rupp, Director Public Affairs at INREV.
Finally, Brad Caswell, Investment Funds Partner at Linklaters LLP outlined his expectations of the impact on the US asset management industry of the Biden-Harris administration. Interviewed by Hermann Beythan, Partner at Linklaters LLP, Caswell suggested asset managers should expect regulatory focus on areas including operational resilience, private equity/hedge funds conflicts of interest issues, ESG priorities, digital assets & crypto.