This is a summary of Oliver Wyman's 10 Asset Management trends for 2024. The original article can be found here
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- Golden Age of Private Credit: Post-Covid, private credit funds have filled the gap left by banks due to new regulations like Basel III, expanding into corporate lending and asset-backed finance. Success will favour those with operational scale, capable of executing larger deals quickly and bringing value to partnerships.
- $2 Trillion Opportunity: As cash yields plateau, asset managers have an opportunity to attract investors with income-generating products, active fixed-income management, and downside protection in equity investments. Structured notes and bond ladders are regaining popularity, with a push towards systematic investing programs.
- Insurance Sector Dynamics: Alternative managers are diversifying into insurance asset management through acquisitions, managing sidecar assets, or providing outsourced CIO solutions. Success will require innovation as early advantages diminish in a competitive landscape.
- Cost Management: Firms are distinguishing between "good" costs that add value and "bad" costs to be eliminated. This involves a deep understanding of cost structures and investing in areas that enhance client value while cutting inefficiencies.
- Japan's Market Potential: Japan is emerging as a significant asset management market, with reforms introducing competition and a substantial asset base. This presents opportunities for alternative managers, especially in insurance asset management.
- ESG Bifurcation: The ESG investment space is dividing into two camps: one integrating ESG broadly with customization, and the other focusing on real-world impact and sustainable thematic investing. This reflects evolving investor preferences and the need for clearer impact outcomes.
- Innovation in Product Development: Asset managers are revamping product research and development to align with modern investor needs, leveraging data, AI, and new technologies such as tokenization and direct indexing to create innovative investment solutions.
- Personalized Models for HNW Investors: Advances in investment technology are making model portfolios more attractive for high-net-worth individuals by offering customization and efficiency at scale, overcoming previous resistance due to tax inefficiency and simplicity.
- Liquification of Private Markets: Semi-liquid structures and fund administration technology are making private markets more accessible, with growing interest in limited partner secondaries and net asset value-based lending. This trend is expected to enhance transparency and efficiency in private market transactions.
- Evolving M&A Strategies: The focus of M&A is shifting from achieving scale to filling capability gaps, especially in private markets. There's a trend towards more aggressive post-deal integration strategies to enhance efficiencies and unify branding, moving away from the previous "hands-off" approach.
