Posts Tagged ‘asset managers’

Strategic Trends for Global Asset Managers

2013-07-03 16.30.18In the years since the 2008 financial crisis, we have seen major shifts in trends influencing growth in the global asset management industry. Four key changes are significantly affecting strategic thinking in the industry:

  • A continuing movement towards bifurcation of vehicles that provide “alpha” and “beta” exposure to market returns. This isn’t by any means new news, but we feel that this is clearly understood by professional investors, but is not fully understood by most non-professional investors. The impetus to find value for fees paid will accelerate the demand for “beta” products further which will cause a sea-shift in assets. Interest in index funds and ETFs will increase even more than they have in recent years.[more…]
  • Increased volatility in the market coupled with increased difficulty in identifying uncorrelated returns will push many alternative strategies into the limelight. Expertise in global emerging and frontier markets, private equity, quant and derivatives-based strategies are becoming the core way of generating any portfolio’s “alpha”. The game is up for those managers that are trying to sell what is effectively beta as alpha.

  • A global macro context is becoming core to any portfolio strategy, including those that bill themselves as focusing on a very targeted market. Even some of the most basic fundamental domestic equity portfolios are now subject to impacts from global markets. It’s becoming less relevant to specialize in one country, region, asset class, or sector. Asset allocation is becoming a more important overlay, especially in understanding movements in correlation over time and ability to shift strategy as correlations shift. Because of massive US corporate investment in China, for instance, many funds that bill themselves as US equity-centric may actually have huge China exposure and need to be managed as such.

  • It’s becoming much more imperative to be able to clearly communicate a firm’s expertise and points of differentiation. The days of asset managers being abstract or vague about their investment philosophies are quickly coming to an end. Many hedge funds and other specialized firms will gain favor because they provide unique value propositions that are not currently offered in the marketplace. What will be critical for their success, though, is the creation of a strong, recognized brand and clear messaging about their differentiation. Additionally, they will need to develop a highly efficient sales organization that can carry that message to investors. As successful as some investment strategies are, the ability to clearly (and sometimes simply) articulate why these strategies are worth investing in is just as important. This is no small effort and should be a core part of the business strategy.

We feel that there is still significant “life” to the traditional fundamental asset management model, mostly because of the huge asset pools that sit in those strategies today and the inertia built into these. But we think that this will shift very soon and very rapidly as competition accelerates and the industry continues to consolidate and chase limited opportunities. The firms that prepare for these shift will be the ones to thrive.

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Oboe Partners: What We Do

OWe established Oboe Partners as a strategy consulting firm with the philosophy that in order to deliver game-changing solutions to our clients, we need to provide not only market context, insight, and advice, but also nose-to-the-grindstone plans to realize the vision.  We have experience working closely with senior management of broker-dealers and asset managers on a variety of assignments that has helped them better operate in a market that is becoming increasingly challenging and competitive. Because of our experience in both the buy-side and sell-side, we understand the full investor value chain which helps us provide unique insights and solutions.

We start with an evaluation of the market space to understand market trends, competitor’s positioning, and most importantly a clear articulation of client needs. Next we do a full, unbiased accounting of our client’s market positioning, strengths, and gaps. Once we fully understand the market and our client, we create innovative recommendations intended to affect strategically significant change. Because of our extensive experience in not just strategy, but in implementation, we create plans for process improvements and platform investments needed to drive change and efficiency.

We’ve applied this discipline to many successful client projects, including entrance into new markets, new product launches, development of new platform capabilities, joint venture and other strategic alliances, and creation of efficiencies using technology and innovative organizational design.

Once these initiatives have been implemented, our engagements often extend to include ongoing measurement and benchmarking of performance. Because we have a strong capability in data and analytics, we help our clients develop analytical tools to help them measure success and deliver real-time information.  We’ve implemented performance dashboards, profitability analysis, and predictive modeling that helps our clients track progress and make changes that will steer their organization across the choppy competitive landscape.

 

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