Optimism prevails among investment managers
Investment managers are prevailingly optimistic about their future business prospects, seeing institutional demand as a key growth driver while they are bullish on alternatives, but regulatory challenges are causing concern.
As many as 88% of investment managers felt optimistic about their business prospects over the next three years, the latest findings from a poll held by outsourcing firm SEI showed.
That optimism was in part driven by positive market prospects, strong performance, and the strength of individual brands, participants in the poll said.
Just 12% of managers were concerned about the future of their business, citing the main reasons as weak distribution strategy and resources, followed by uncompetitive performance. Of those concerned, only 14% thought poor market prospects were to blame.
Institutional investor demand is meanwhile expected to drive future business growth, said 46% of managers. RIAs and IFAs were perceived as the next highest source of future business, with 20% of managers seeing potential to grow their assets through those clients. 18% believed retirement plans will generate demand, while 11% planned to look to sovereign wealth funds.
Bullishness on alternatives underpinned the positive outlook of investment managers. Three out of four, or 76%, of those surveyed by SEI said active alternative strategies have the best growth prospects over the next three years.
Only 13% said managers using passive strategies, including ETFs, had good prospects for growing their AUM, while a mere 11% named active long-only strategies.
In spite of the improved general outlook, one out of three managers cited regulatory challenges as their primary concern for the industry over the next 12 – 18 months. A further 28% thought challenges will arise out of geopolitical and economic uncertainty.
But only 10% foresaw difficulty finding quality investment opportunities over the next year to year and a half.
SEI polled 60 C-level and senior executives at hedge funds, mutual funds, separately managed accounts, and collective investment trusts who work in the City of London.