Returns set to stay low for fund managers: survey
The majority of fund managers around the world expect their company’s return on equity to remain below pre-crisis levels, while many are increasing their focus on cost reduction and product innovation, according to a new survey.
The report by RBC Dexia and Accenture found that more than half of the respondents (59 per cent) forecast a return on equity below 15 per cent, while a quarter of those respondents expect returns on equity to be less than 10 per cent. Prior to the global financial crisis, the average return for these participants was 20 per cent.
Falling market prices and a move away from high margin products to highly liquid, low-fee products are to blame for falling revenue, according to RBC Dexia global head of product and client segments Rob Wright.
“Our research suggests that fund managers are looking to solutions that allow them to concentrate on their core competencies and provide access to the latest technology necessary to securing front office performance,” Wright said.
Low-equity returns and pressure on fees have pushed a movement towards efficiency in operations, according to the managing director of Accenture in Luxembourg, Pascal Denis.
This explains why more than three-quarters of respondents (77 per cent) said they believed the industry would see an increase in outsourcing over the next three years, ranging from fund accounting and custody to back-office technology and risk management.
As well as reducing costs, respondents cited service quality and operational flexibility as major reasons for outsourcing.
The survey involved online interviews of fund managers at 80 companies from Australia, United Kingdom, North America, Europe and the Middle East — as well as 100 face-to-face interviews.
Recommended for you
A hiring spree is expected in private markets with 90 per cent of firms expecting to maintain or increase their headcount over the next 12 months, according to Preqin.
Abrdn Investments has hired a new global chief executive as Rene Buehlmann steps down after less than two years, it also announced a new senior leadership structure.
Having received bids from Bell Financial Group and AxiCorp, trading platform Selfwealth has confirmed it has entered into a scheme implementation deed after both parties were invited to make a higher bid.
Clime Investment Management has faced shareholder backlash around “unsatisfactory” financial results and is enacting cost reductions to return the business to profitability by Q1 2025.
