The asset management landscape continues to evolve with certain key trends – existing and new – driving the adaption of models and strategies.

  1. More money moves to ESG strategies

One of the most significant changes to impact the asset management industry is environmental, social and governance (ESG) compliance. While it may have provided players with a competitive advantage in the past, it is now part and parcel of managing money….

  1. The rise of enhanced passive funds

The trend of money going into passive strategies is nothing new. We know that passives have taken money away from active fund managers over the years, which is predominantly a function of very few active fund managers outperforming the benchmark through a cycle….

  1. Fees remain in the spotlight

The isSue of fees is clearly ongoing. In the past, active fund managers could charge whatever they wanted to, especially for a good track record. But competition has increased over time, and so it is not always that easy for fund managers to continuously outperform the benchmark. There is now a spotlight on fees charged in relation to returns earned….

  1. Huge flows into offshore and private equity

While not specific to the asset management industry, the magnitude of money going offshore has been ongoing for years – especially from a South Africa point of view. While 20 years ago it was acceptable to only manage domestic assets, that has now changed. Asset managers have had to reinvent themselves to become global….

  1. Shift from individual share portfolios to fund portfolios

In South Africa and abroad, there is an increasing trend of client portfolio being managed via funds as opposed to direct shares. Instead of holding a portfolio of individual shares, the trend is now to have a portfolio that consists of funds – equity funds, fixed income funds, or whatever the case may be. There may be different reasons depending on each investor’s rationale, but some of the considerations may potentially be the fact that the fund manager may trade within the fund without triggering a taxable event, but also Inheritance tax in foreign jurisdictions, as a result of situs (location of the asset)….

  1. Algorithms driving never-seen-before market movements

Whether there’s good or bad news, markets tend to be much more sensitive than what they have been before. A lot of that is driven simply by the positioning of some algorithm funds. Using supercomputers and complex algorithms that pick up on breaking news, company/stock/economic information and price and volume movements, many institutions now make trades in a matter of microseconds, through a practice known as program trading….