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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.