FundForum International, one of the biggest European asset management conferences of the year, takes place in Berlin this week.
As delegates prepared for three days of high-level panel talks and seminars we asked a number of participants and visitors for their hot forum topics.
TJEERD ‘TJ’ VOSKAMP, GLOBAL HEAD OF WHOLESALE DISTRIBUTION AT AVIVA INVESTORS
What are the new markets that the industry should be focusing on in the coming months and why?
As populations continue to grow older, the need to deliver outperformance throughout the cycle is more important than ever. From a product angle, two areas we are focusing on are next-generation retirement solutions and the implementation of ESG.
In terms of retirement solutions, clients are desperate for innovative and tailored products to battle what has been a lost decade of low rates to ensure sufficient funding in their retirement.
The second area we believe is becoming critical to long-term investing is ESG. In 2001, we were the first asset manager in the world to vote against companies at their annual general meetings if they did not produce important data on sustainability issues. Since this time, we have engaged with thousands of companies to promote more sustainable business practices.
We are helping our customers understand and choose fund management with integrity, for example, by creating public league tables ranking companies on sustainability issues, such as the Corporate Human Rights Benchmark.
The opportunity is clear: better-run companies over time deliver consistently superior returns.
From a regional point of view, developing regions such as Asia, China and even frontier markets are obvious places to put a flag down to capture their fast-growing wealth potential. Developed markets, too are equally going through a period of much-needed change and digital disruption, and should not be discounted. Though of course, there is a clear need to have local distribution and perhaps manufacturing capability to cater for an ever-growing local demand.
JOERG SCHMIDT, HEAD OF MANAGER SELECTION AT UNION INVESTMENT
What will be the main challenges for German wholesale investors over the next couple of years?
The low-yield environment is a big challenge for many German investors. The challenge is to create solutions that can close the performance gap. Multi-asset funds have been successful with this task, which can be proven by performance and fund flows. Nevertheless, German investors will have to onboard more risk to comply with the return targets they have based on their historical experience.
What other hot topics are you looking forward to debating at FundForum 2018?
The integration of ESG in multiple investment strategies is a topic that is of interest for us. Especially in the absolute return space, we think there is large potential for further growth for managers through the launch of strategies that integrate ESG criteria in a market-neutral framework, for example in equity long/short.
STUART PARKER, PRESIDENT AND CHIEF EXECUTIVE OF PGIM INVESTMENTS, THE GLOBAL MANUFACTURER AND FUND DISTRIBUTOR OF PGIM
What do you see as the key opportunities and trends in global distribution in 2018?
The opportunities are considerable, especially in income solutions and packaged products, and global expansion at a reasonable and measured approach is ideal.
We in the industry must evaluate each market separately to determine the opportunities, as well as the risks and barriers to entry. We must be sure that we have a robust enough infrastructure, including product diversity, well-coordinated legal and compliance guidance to assess each region individually, and the ability to assume added markets and growth.
Those who succeed will have done their homework to be sure that they have what each market wants, and are able to package their solutions in investment vehicles that meet the needs of investors. Clients are telling us they want to do more business with fewer firms that have broad skills and capabilities as well as a large global footprint.
What are the key topical issues you expect to be debated at this year’s FundForum?
Regulation will continue to be at the centre of debate, especially MiFID II’s focus on transparency and its effect on trading and research rules.
Also getting attention will be increased reliance on technology and the advent of in-house packaged products though subadvisors. I’m sure we’ll also spend time discussing the transformative nature of emerging technology as a source of growth and as a tool to enhance investor reach.
JOE SALIBA, DEPUTY CHIEF EXECUTIVE OF ASSET SERVICING GROUP CACEIS
How do you expect augmented artificial intelligence and quantum computing will impact the financial services industry in the coming years?
Quantum computers will render some methods of cryptography used in financial services useless. What is more, this encryption-cracking capability could come any time within the next five years, so it is essential to plan for post-quantum security now by selecting encryption methods that are deemed ‘quantum safe’.
As always, with technological threats come opportunities, and the enormous power of quantum computers can be harnessed to gain a massive first-starter advantage in areas such as high-frequency trading and stock option pricing.
However, building the algorithms that are optimised for quantum computing power in areas like cryptography, pattern-matching and data sorting will have a major impact on security, fraud detection and data analysis once the power of quantum computing arrives.
True AI will enable funds to absorb vast amounts of data, combine it with self-optimising algorithms and make increasingly accurate predictions about the financial markets. Indeed, there are several hedge funds today that are fully autonomous and make all stock trades using artificial intelligence.
As chatbots improve, robo-advice becomes increasingly accurate and AI outperforms human managers, it will be essential to focus on how humans and machines can best co-exist. Machines’ lack of human bias could help us find new correlations into vast silos of data, but human intuition, common sense and imagination remain an important balance to AI’s weaknesses.
©2018 funds europe
