Columbia Threadneedle: For asset managers, a market share fight

Columbia Threadneedle: For asset managers, a market share fight
Asset Manager

Inflation has come down and things have turned out a lot better – economically – than many predicted at the beginning of 2023. Our CEO gives his thoughts on what’s in store for markets and asset managers in 2024.

26.01.2024 | 06:05 Uhr

The biggest surprise of the past two years has been a 500-plus basis point increase in interest rates without a recession. While there are pockets of the economy that are not doing well, we have gone from quantitative easing to quantitative tightening without a credit cycle. There are a lot of reasons that hasn’t happened – fiscal stimulus and pent-up savings during the pandemic among them – but I think we can also give some credit to the US Federal Reserve for calibrating the rate increases successfully.

From an investment perspective, the rate rises have meant that money market rates are attractive once again, but getting people to consider other asset classes has been a persistent challenge for financial advisors. Cash is great in the short term, but it’s not a long-term investment vehicle. I think investors will begin to see that as rates come down over 2024.

For institutional investors, higher rates have helped many match their liabilities, and not surprisingly they are taking their time with decisions on allocations. Generally, we are seeing them allocate their risk and fee budgets to alternatives and private credit especially. I think the latter will continue to grow because banking regulations have discouraged banks from lending. They don’t want to hold loans on their balance sheets because the capital costs are too high. The private markets are fairly opaque, though, and there could be some accidents – especially if we return to a more historically normal credit cycle.

There is plenty for investors to worry about in 2024

From a technical perspective, I think equity valuations in the US are extended. In addition, pockets of traditional commercial real estate are facing significant uncertainty, particularly older office buildings which haven’t bounced back in terms of occupancy since the global pandemic. There will be a shakeout, and there are going to be some
incredible opportunities – but there is pain to get through first.

There is also considerable geopolitical risk, including two wars that could become wider conflicts and the ever-present concern about China, which wants to dominate the Pacific region. Does this spill over into a major international incident? Hopefully not, but it is certainly something we cannot discard as a possibility. We are also heading into a US election year in a particularly polarised political environment. In the long run, politics don’t matter to markets. What does matter for the business community is sensible regulation, endurance of institutions and the rule of law. And if all that sort of stays in place, well then – politics will be politics.

The asset management industry generally remains in flux

There are too many traditional asset managers and products and not enough assets to go around. It is a market share fight both in the US and Europe, and I think it is going to lead to some more consolidation. Most people think we will end up with a barbellshaped industry, with some very large managers that do a lot of things really well, and a set of small managers that offer single products really well; in the middle you are probably going to see fewer and fewer players.

Artificial intelligence (AI) is a game-changer. We are going to be able to do a lot with it: it is going to get embedded into the operating side of our business; it is going to assist with research; it is probably going to assist with portfolio management at some point. That said, I think it is a co-pilot that will supplement a human’s work rather than replace it. More broadly, I think we will see technology and AI become a bigger part of every industry, but I think there is more to be done to understand all the possibilities and risks.


Important Information

For use by professional clients and/or equivalent investor types in your jurisdiction (not to be used with or passed on to retail clients). For marketing purposes.

This document is intended for informational purposes only and should not be considered representative of any particular investment. This should not be considered an offer or solicitation to buy or sell any securities or other financial instruments, or to provide investment advice or services. Investing involves risk including the risk of loss of principal. Your capital is at risk. Market risk may affect a single issuer, sector of the economy, industry or the market as a whole. The value of investments is not guaranteed, and therefore an investor may not get back the amount invested. International investing involves certain risks and volatility due to potential political, economic or currency fluctuations and different financial and accounting standards. The securities included herein are for illustrative purposes only, subject to change and should not be construed as a recommendation to buy or sell. Securities discussed may or may not prove profitable. The views expressed are as of the date given, may change as market or other conditions change and may differ from views expressed by other Columbia Threadneedle Investments (Columbia Threadneedle) associates or affiliates. Actual investments or investment decisions made by Columbia Threadneedle and its affiliates, whether for its own account or on behalf of clients, may not necessarily reflect the views expressed. This information is not intended to provide investment advice and does not take into consideration individual investor circumstances. Investment decisions should always be made based on an investor’s specific financial needs, objectives, goals, time horizon and risk tolerance. Asset classes described may not be suitable for all investors. Past performance does not guarantee future results, and no forecast should be considered a guarantee either. Information and opinions provided by third parties have been obtained from sources believed to be reliable, but accuracy and completeness cannot be guaranteed. This document and its contents have not been reviewed by any regulatory authority.

In Australia: Issued by Threadneedle Investments Singapore (Pte.) Limited [“TIS”], ARBN 600 027 414. TIS is exempt from the requirement to hold an Australian financial services licence under the Corporations Act 2001 (Cth) and relies on Class Order 03/1102 in respect of the financial services it provides to wholesale clients in Australia. This document should only be distributed in Australia to “wholesale clients” as defined in Section 761G of the Corporations Act. TIS is regulated in Singapore (Registration number: 201101559W) by the Monetary Authority of Singapore under the Securities and Futures Act (Chapter 289), which differ from Australian laws.

In Singapore: Issued by Threadneedle Investments Singapore (Pte.) Limited, 3 Killiney Road, #07-07, Winsland House 1, Singapore 239519, which is regulated in Singapore by the Monetary Authority of Singapore under the Securities and Futures Act (Chapter 289). Registration number: 201101559W. This advertisement has not been reviewed by the Monetary Authority of Singapore.

In Hong Kong: Issued by Threadneedle Portfolio Services Hong Kong Limited 天利投資管理香港有限公司. Unit 3004, Two Exchange Square, 8 Connaught Place, Hong Kong, which is licensed by the Securities and Futures Commission (“SFC”) to conduct Type 1 regulated activities (CE:AQA779). Registered in Hong Kong under the Companies Ordinance (Chapter 622), No. 1173058.

In Japan: Issued by Columbia Threadneedle Investments Japan Co., Ltd. Financial Instruments Business Operator, The Director-General of Kanto Local Finance Bureau (FIBO) No.3281, and a member of Japan Investment Advisers Association and Type II Financial Instruments Firms Association.

In the UK: Issued by Threadneedle Asset Management Limited, No. 573204 and/or Columbia Threadneedle Management Limited, No. 517895, both registered in England and Wales and authorised and regulated in the UK by the Financial Conduct Authority.

In the EEA: Issued by Threadneedle Management Luxembourg S.A., registered with the Registre de Commerce et des Sociétés (Luxembourg), No. B 110242 and/or Columbia Threadneedle Netherlands B.V., regulated by the Dutch Authority for the Financial Markets (AFM), registered No. 08068841.

In Switzerland: Issued by Threadneedle Portfolio Services AG, an unregulated Swiss firm or Columbia Threadneedle Management (Swiss) GmbH, acting as representative office of Columbia Threadneedle Management Limited, authorised and regulated by the Swiss Financial Market Supervisory Authority (FINMA).

In the Middle East: This document is distributed by Columbia Threadneedle Investments (ME) Limited, which is regulated by the Dubai Financial Services Authority (DFSA). For Distributors: This document is intended to provide distributors with information about Group products and services and is not for further distribution. For Institutional Clients: The information in this document is not intended as financial advice and is only intended for persons with appropriate investment knowledge and who meet the regulatory criteria to be classified as a Professional Client or Market Counterparties and no other Person should act upon it.

Columbia Threadneedle Investments is the global brand name of the Columbia and Threadneedle group of companies.

Diesen Beitrag teilen: