EUROPE – Eighty percent of European chief investment officers surveyed by US risk measurement firm Barra are positive that assets under management will increase over 2003.
Greenwich Associates research group, in conjunction with Barra, surveyed 41 chief investment officers or their equivalents in continental Europe for their expectations about the assets under management, market dynamics and investment process.
Eighty percent of these surveyed expected assets under management to increase over 2003, and 95% expected an increase over the next three years. Smaller asset managers were more bullish, expecting an 18% increase over the next year, and a 50% increase over the next three years. Larger managers predicted growth of 10% and 33% for those periods. Geographically, investors in the UK and Ireland expect strongest growth, closely followed by investors in the German-speaking countries.
Drivers of growth were split up as follows:
37% of growth is expected as a result of new client mandates
24% of growth is expected as a result of asset growth
21% of growth is expected as a result of existing client mandates
18% of growth is expected as a result of retail clients
In terms of asset allocation, hedge fund holdings (including fund of funds holdings) are expected to see the greatest increase over the next year, with those surveyed forecasting 15% growth. Equities are expected to see an 8% increase, real estate – 6%, fixed income – 5%, and private equity – 3%.
Other important points revealed from the survey are:
- Asset management firms that are part of larger institutions are perceived as having an advantage in growing their business
- One third of managers will outsource client services in the next three years
- The majority of smaller asset managers are planning on changing distribution channels in the next three years
- Stock selection is considered the most important element of the investment process
- 61% of investors feel that rigorous risk control is more important today than one year ago
- A transparent investment process and fund manager skill are considered the most important services
- Fundamental research is twice as important as quantitative processes in winning client mandates
The survey is the first of its kind to be conducted by Barra. Barra and Greenwich hope to run a similar survey at the end of 2003/beginning of 2004.