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Large asset managers outpace smaller rivals

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  • Large asset managers outpace smaller rivals

GLOBAL - Large asset managers outperformed their smaller rivals in business terms in 2009 and look set to do so in the future, according to new research.

A study by SimCorp StrategyLab showed that more than half of companies with 1,000 employees or more achieved growth of at least 6% in 2009.

The report found that the key drivers in achieving growth were: having growth as a primary focus; a highly educated workforce, and a more adaptable IT infrastructure.

High levels of growth were also attributed in part to the introduction of new products, the targeting of new markets and the opening of new offices.

"There is a clear emphasis on new client acquisition, which implies client losses on the part of competitors resulting in an industry shakeout," said Professor Ingo Walter, director of SimCorp StrategyLab.

Almost a quarter of surveyed investment managers rated the search for new clients as their most important task, with another 32% ranking it as their second most important priority. New products were also seen as significant, with a fifth of respondents ranking innovation in this area as their second most important step.

"On the product side, there is importance attached to innovation which actually adds value as perceived by clients who are sensitive to the complexity, lack of transparency and illiquidity that characterised financial innovation leading up to the crisis," Walter said.

The report also said the trend for larger firms to outperform their smaller counterparts looked set to continue with 68% of firms with annual revenue of over $1bn expected to achieve a growth of 6% of more in 2010.

Despite many companies achieving strong growth, the majority still remained cautious and didn't expect revenue growth to exceed 5% this year. Only 16% expected upwards of 9% growth, with one company even continuing to expect negative growth in revenue for 2010.

Additionally, most companies accepted that their IT infrastructure was important for future growth, while the survey also indicated that growth was often accepted as a result of successful strategies, rather than an independent strategy in itself.

Walter said a number of larger firms expected to be able to leverage their IT infrastructures as a durable source of competitive advantage and growth.

He added: "But the structure, conduct and competitive performance of individual asset managers cannot be taken for granted, even in an optimistic growth scenario."

All responses for the Global Investment Management Growth Survey 2010 were conducted in February and March of this year.

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