Multiple lockdown restrictions have brought about a simpler way of working for some – remotely from home for most – but for institutional investors it also meant coming up with strategic models that could maintain the quality of asset managers’ due diligence – existing or potential.
Manager due diligence takes an extensive amount of effort during normal times, but these are certainly not normal times. In a world where travel has become virtually impossible, institutions must adapt to achieve this goal.
It is true that these days most data work can be done remotely. However, there can be a problem if there is a complex issue or a topic that lacks good statistics, for instance.
In most cases, video conferencing has been described as good enough for the time being, to get a feel for a management team during lockdown, but institutions plan to revert to meeting face-to-face soon.
COVID-19 and the subsequent lockdowns have not stopped investment searches, but many institutions had to halt new hires for fear of not being able to build the same level of conviction virtually. Norway’s sovereign wealth fund is yet to make a new manager hire since the pandemic started.
According to Moody’s research, European asset managers’ revenues declined 9% compared to the second half of 2019, which showed the sector’s weaker-than average assets under management in the first half of 2020. The research also showed that combined assets fell 1.5% to €10.4trn, compared to the end of 2019.
Video conferencing has increased dialogue and access in some instances between institutional investors and asset managers, with increased need to stay connected and decreased time and cost of logistics. It is difficult or impossible, however, to replace the value of human interaction.
Venilia Amorim, editor, IPE.com