[ U P D AT E ]
Asset managers
looking to be
green and lean
OUR ROUND-UP OF FUND
FORUM BERLIN LOOKS AT
HOW ASSET MANAGERS ARE
LOOKING TO FACTOR IN ESG TO
THEIR STRATEGIES, WHILE THE
TECHNOLOGY DEBATE OF COST
VS REWARD RUMBLES ON.
A
firmly engrained summer tradition, the
asset management industry gathered
in Berlin for the third year running for its
annual Funds Forum expo. Over the last 12
months, active fund managers have argua-
bly been on the back foot. The industry – in
aggregate – has generated underwhelming
returns, while it is struggling to keep pace
with disruptive technologies and challenging
regulations. But what were the key topics at
Fund Forum?
Technology was a recurring theme at
Fund Forum with AI and blockchain being
among the most commonly talked about
disruptors. By using AI to analyse big data,
a number of fund managers believe they
will acquire a competitive edge in stock and
bond selection, picking out trends which
their peers may have missed.
AI could also bring efficiencies to the
middle and back office, by streamlining
a number of antiquated processes and
freeing up scant resources. The same is
true of blockchain. One panel, for example,
discussed the benefits the technology could
introduce into fund distribution, a trans-
actional activity full of intermediation and
unnecessary costs.
Despite the purported efficiencies of
the technology, only a minority of fund
managers are actually using or trialling it
internally. Cost remains an overarching issue
and managers were warned that integrating
disruptive technology into their operations
will not facilitate savings immediately but
would actually add to their overheads. With
firms trying to scale down their spending,
many simply do not want to invest into
a speculative technology system until it
acquires a better track record and becomes
more accessible from a cost perspective.
Millennials, according to most fund man-
agers, have no money and are financially
illiterate, making them a rather odd target
market. However, this demographic is on
the cusp of receiving one of the biggest fi-
nancial windfalls in history as baby-boomers
bequeath them their wealth. Managers are
therefore trying to ingratiate themselves
with this investor
demographic. Studies suggest these
millennial investors are more socially and
environmentally conscious than previous
generations, prompting more managers to
offer products with an ESG tint.
EU regulators – alongside investors – are
also insisting the financial services industry
becomes greener. EU proposals – as part
of its sustainable finance initiative – will
introduce clarity around how institutional
investors including asset managers should
integrate ESG into their decision-making. It
will also require firms to disclose how ESG
is being incorporated into the investment
processes. While few Fund Forum attendees
are enthusiastic about the idea of yet more
reporting, many see climate change disclo-
sure as being a positive.
Heard at Fund Forum:
“At a generic level, a lot of
asset managers want to
position themselves away
from paying fixed costs
internally to incurring
variable costs through an
outsourced relationship.”
Arnaud Claudon, head of asset
managers client line and member
of the executive committee at BNP
Paribas Securities Services.
“Robots are seen by staff as
a threat as repeat tasks are
effectively being removed.
Nonetheless, attitudes are
changing as people now
recognise the technology
brings about opportunities.
We have certainly seen a
change in mindsets.”
Edward Wierenga, head of
business implementation at NN
Investment Partners.
“AI has with it licensing
costs. There is also an
ethical dimension to AI. If
customers are dealing with AI
technology, it needs to be made
very clear to them that they
are interacting with a robot
and not a person.”
Lorna Martyn, head of technolo-
gy at Fidelity Investments,
Summer 2018
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