Global Custodian Winter 2018 | Page 48

[ T U R N O F T H E Y E A R | N E W Y E A R Growth for ETFs, ESG and private markets First, ETFs. We are seeing increased interest in launching new fund ranges in Europe, from both US asset managers and larger UK managers. This could add up to a significant number of new entrants to the European ETF market in 2019. Second, private markets. The potential for alpha through exposure to private equity, real estate, infrastructure and private debt continues to encourage capital. Private debt is a particularly strong growth area. 2019 may see an accel- 29 March will only mark the beginning of fundamental changes that will affect financial services firms throughout 2019 and beyond. Winter 2018 erated focus by private markets investment managers on processes and outsourcing. Third, if 2018 has been the year of talking about ESG then in 2019 we are likely to see that turn more decidedly into action. While some key elements are not fully in place – in particular the measurement of non-financial performance – 2019 may be the year when ESG truly goes mainstream. 2019 will be a year when politics will trump business. Instabil- ity between the two biggest trade blocs, China and the USA, uncertainty in the relationship between the UK and the EU, and troubling re-alignments in the near and Middle East, coupled with on-going background worries about global terrorism and cyber disruption present a difficult to navigate backdrop for markets in 2019. It is likely that most of this is already in the prices for most The move towards holistic investment analysis with the incorporation of environmental, social and governance factors (ESG) has opened new business opportunities for custody and asset servicing. One of the new opportuni- ties includes ESG reporting. For example, CACEIS recently launched a reporting service and partnering with Vigeo Eiris, a large ESG data provider to support the ESG related reporting. The other area of opportunity will be data and analytics, a need State Street is already servicing with the Global Custodian Daron Pearce, CEO, BNY Mellon Asset Servicing EMEA A year when politics will trump business Custodians will branch out further into ESG 48 P R E D I C T I O N S ] Peter Randall, president, SETL assets but central bank actions in response to the termination of the various quantitative easing pro- grammes will likely reveal tighter than expected bond markets which may push up interest rates as well. Expect volatility, remem- ber it is your friend. I expect to see markets creeping around looking for action, then bursts of frenetic adjustments followed by periods of ennui. Paul Sinthunont, analyst, Aite Group ESGX platform, a web-based tool that helps identify and quantify clients’ ESG exposures. The platform supports multiple ESG data vendors and also acts as redistributor of the data. As ESG integration continues to move into the mainstream and reporting becomes increasingly standard- ized and potentially mandatory, it presents strong area of growth for custodians. At this early stage, it will be seen as a differentiating factor, with partnerships or even acquisi- tion of ESG data providers by custodians, likely for 2019.