This newsletter will focus on highlighting some of the current trends of the asset management industry. More specifically, it will assess how the themes of sustainability, technology and risk management are increasingly considered by investors and as major assets.
Sustainability has become a key factor in investment decision making. In fact, globally, more than ¼ of assets under management are invested according to environmental, social and governance (ESG) factors . The rising ESG disclosure requirements for financial players represent a new priority . Considering some asset owners have recently made some ambitious commitments in that regard, to initiatives such as Net Zero Asset Owner Alliance or One Planet, asset managers are now required to develop and integrate ESG considerations in their investment processes. This means they would need to develop an ESG expertise in order to advise on ESG products.
Technology is another asset on the rise, which can take many different forms. For instance, digital assets are becoming more and more accepted in the mainstream investing community. They are progressively perceived as legit assets that hold value and are redefining business models and services. On the other hand, technology, in the form of automation, data gathering or other forms of analytics, are also emerging as new investment. Overall, artificial intelligence is already greatly impacting portfolio management and investment decision-making.
3. Post-Covid 19 & new regulatory agenda
In the past years, Covid has strongly impacted the asset management industry. As a result, asset managers are now focusing on recovering and rebuilding for the future, as well as strengthening their resilience. Attention to risk management and exposure is thus growing. This often comes is in the form of cybersecurity to prevent data security breaches for instance. Another focus that has namely been triggered by the covid crisis, is the attention to cost optimization opportunities across financial services.
While the 3 trends mentioned are particularly noticeable since they are gaining strong momentum in the emerging assets industry, others can also be identified such as the growing attention to regulatory compliance, the broadening of the investment universe or the search for yield in new asset classes.