“Full steam ahead” say investment management firms
Investit Intelligence, the research forum dedicated to the investment management industry, has revealed the UK’s largest investment management firms’ and third party administrators’ top priorities for spend and focus in the coming year.
Senior executives from 28 investment management companies and third party administrators attended Investit Intelligence’s Summer Conference on 19 July. In a survey, they highlighted the following as key areas of spend or focus for the year ahead:
- OTC derivatives (89%).
- Performance analysis (89%).
- Risk systems (89%).
- Launching and supporting new products (86%).
Conference attendees also completed a business optimism indicator. 55% responded ‘full steam ahead’, 45% said ‘steady as she goes’ and only 6% responded ‘batten down the hatches’ (ie preparing for stormy weather). No respondents suggested growth was out of control. The key areas of spend and focus support this business optimism, and indicate that investment managers are focusing on business development projects.
The operational and technology challenges associated with OTCs, continue to feature in investment management firms’ top concerns. Over the past two years, Investit Intelligence has written research papers on OTCs covering governance, pricing and valuation, system infrastructures and collateral management.
Investment managers are launching new products and investment strategies (such as LDI and 130:30 funds) and increasing their use of more complex instruments, including OTCs. This is introducing new challenges for performance teams in the delivery of accurate and complete explanations of portfolio performance. New products and increased regulation, such as MiFID, TCF, CRD, UCITS III, mean compliance and operational risk teams have a greater scope and have grown in response. Many investment managers are investigating how systems can be used to improve their effectiveness.
The Summer Conference also revealed some lesser concerns for managers. Only 39% of investment managers are prioritising merger and acquisitions. Only 36% are prioritising supporting alternative assets such as private equity - 24% are prioritising supporting commodities.
Catherine Doherty, Principal at Investit comments, “This survey of leading fund managers attending the Investit Intelligence Summer Conference has enabled us to identify key areas of interest and focus for spend in the year ahead. It’s full team ahead for investment managers, with all priorities indicating investment in supporting and reporting on new products and instruments. We will look forward to exploring these topics as we continue to help Investit Intelligence members stay ahead of the game.”