GLOBAL - Tough markets, blurring lines between investment product providers and the continued polarisation of alpha and beta present a significant threat to asset managers, according to research from McKinsey & Company.
It found traditional active managers would also struggle as the alpha space became dominated by a larger number of small, specialist boutiques.
The unbundling of alpha and beta would put particular pressure on medium sized asset managers across the board, it warned. In Europe, this would be exacerbated by the growing traction of US players throughout the region and the development of cross-border products.
Speaking at the Fund Manager Selection conference in Geneva, Robert Stark, principal at McKinsey, said: "The investment world is getting more complex as the markets for alpha and beta continue to polarise and the boundaries between providers become less clear. This poses a significant threat to traditional asset managers to secure their share of the larger market. Mid-sized players in particular are going to struggle as the competitive frontiers are redesigned."
In the short term, Stark added that he expected 2008 to be a bad year for asset managers' profits.
"Asset managers have not been very good at containing costs, which increased in 2007 for the first time in three years," he said.
"As volatile markets continue, we could see an immediate and dramatic decrease in their profitability. 2008 is going to be a tough year for asset managers and the investment banks they trade with."
Royal London saw its new group pension business decline over the first half of 2018 as the rollout of auto-enrolment (AE) drew to a close, according to its interim results.
Now Pensions has made "huge progress" in resolving legacy administration issues - switching systems and completing unit adjustment for a "large proportion" of members, it says.
Trustees of the Airways Pension Scheme (APS) will not make a firm decision on whether to appeal the Court of Appeal's judgment on discretionary increase payments until September.
Accountant Hashmukh Shah has pleaded guilty to deliberately providing false information to The Pensions Regulator (TPR) when stating a pension scheme had been set up for staff of a London-based restaurant.