A better bill of health has been given to the asset management industry as Moody’s, a ratings agency, upgraded the business outlook from negative to stable.
The ratings agency said this reflected that the industry was adapting to challenges.
‘Asset management – Global 2018 outlook’ by Moody’s said merger and acquisition activity reflected an industry in a state of flux, but that deals between large complementary organisations, such as Standard Life and Aberdeen Asset Management, had fortified market positions.
Acquisitions of products in either more defensible or more dynamic industry segments – such as Legg Mason’s acquisition of Clarion and Entrust – were allowing acquirers to adapt to change, with potentially less financial risk.
Key drivers of Moody’s stable outlook for the industry are the emergence of new products that blend features of active and passive management, and the use of passive instruments as inputs in active disciplines.
Neal Epstein, vice president at Moody’s, said: "Actively managed products that are most susceptible to passive substitution look increasingly redundant, and competition with cheaper passive products is driving fees lower across the industry."
However, in a separate study on UK asset managers’ priority markets for trade and investment, financial consultants EY noted the global balance of power in asset management had changed as the bulk of global savings had moved in favour of developing countries for the first time.
China, Japan, Australia, South Korea and the US were the most important countries in investment terms, EY said in its ‘EY wealth and asset management outlook for 2018’.
Meanwhile, Brexit is a disruptor to the UK industry but it also leaves it with an opportunity to focus on the most attractive jurisdictions.
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