EUROPE - Asset managers will likely shift their investment focus towards alternative, debt-oriented products over the coming years, due to both incoming European regulation and the ongoing deleveraging undertaken by the banking sector, the European Fund and Asset Management Association (EFAMA) has said.

One attendee of the International Capital Market Association (ICMA) conference in Milan last week asked panellists at a talk on the impact of deleveraging whether asset management companies would be likely to invest in products that banks could no longer provide due to regulatory constraints and capital requirement issues.

The attendee also asked whether asset managers would have the capacity to raise commitments from their clients to make such investments.

Peter de Proft, director general of EFAMA, responded that his industry would look to step in, saying that asset management firms would be likely consider the purchase of assets being sold off by banks.

However, he said that asset managers were likely to focus on less liquid assets - such as private equity or hedge funds - in the future, as they provided higher returns on average.

Robert Parker, senior adviser at Credit Suisse Asset Management, agreed with de Proft's assessment, arguing that there was currently a "clear" shift, with infrastructure assets being sold by banks to infrastructure fund managers.

"Having said that, there are also buyers out there interested in buying more liquid assets", he added. "But we are probably not going to see a major boost of investors investing in very liquid, plain vanilla funds."

De Proft went on to say that it is still difficult for asset management companies to know what their business will look like in two to three years time and how profitable it will be giving the new policies coming in Europe. 

"The business model will be, with no doubt, all shaken up," he said. "It is difficult at the moment to make any cost assessment on all those regulations.

"One thing is sure however. We are currently at a cross-road in the industry as a number of decisions has to be taken quickly."