Investment managers who control $9 trillion of assets predict buoyant revenue growth over the next three years, with more than half seeing revenues expand by 20 percent, a survey on July 03 showed.
Asset management executives are focussed on growing sales rather than cutting costs, as was the case three years ago, the survey of 81 investment management groups by Pricewaterhouse Coopers (PwC) found.
Some 55 percent of those asked see growth rising by 20 percent or more, while 44 percent expect a more moderate pace of expansion, of 5 to 19 percent. Only one percent of respondents expect revenues to shrink.
Executives said they expect alternative asset classes - such as hedge funds - to provide the most lucrative opportunities for making market-beating returns over the next three years.
Equities will account for 41 percent of all fund management firms' assets under management in three years' time, down from 43 percent now, while fixed income will account for 29 percent, down from 30 percent, cash down to 8 percent from 11 percent, while property will rise to 4 percent from 3 percent.
Hedge fund assets will rise to 10 percent of all assets over three years from 7 percent, and private equity will rise to 3 percent from 2 percent.
Asset managers face a heavier burden of complying with new regulations, in part driven by the greater use of derivative tools. Some companies now consider their internal systems inadequate to comply with rising regulator standards, the 33-page report said.
There will be greater pressure to pay more money to attract and keep top talent because of investor hunger for high returns, widening the pay scales between fund managers, as already happens in the investment banking sector, it said.
Companies are likely to continue outsourcing administration and other functions to outside companies even though some businesses have experienced mixed results in outsourcing work, PwC said.
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