Market Comment

We anticipate that 2010/11 will be buoyant for the asset management industry, following the contraction of 2007/8 and the return of activity during 2009. There has been a certain amount of restructuring in the industry over the last year, for example as retail banks have sold off their asset management subsidiaries (e.g. BGI, Insight). However, we expect more M&A activity over the coming year, focussed amongst the medium tier players, as well as a number of new entrants with specialist focus on hedging certain risk categories.

The underlying trend for pension schemes to seek to de-risk whilst at the same time address funding deficits will undoubtedly continue. This will see further use of liability driven investment (LDI), albeit with smarter forms of implementation and less use of vanilla products and implementations. This latter is partially due to market pricing and liquidity issues, but also as a result of a spreading of LDI experience across the industry. We also anticipate more focus on hedging longevity risk, albeit this appears to be driven more by the "sell" side than the "buy" side at present.

We also anticipate continuance in the trend towards investment in alternative asset classes. This, together with the growing focus on absolute return products, is expected to see an ongoing pipeline of new fund launches. The jury is still out on whether the forthcoming implementation of UCITS IV regulations in June 2011 will spark any significant activity to prepare products for sale across European markets.

Finally, there are a number of initiatives in play that will impact upon the way in which the industry manufactures products for its clients. To touch on just one, the proposed introduction of centralised derivative clearing houses for OTC derivatives could lead to fundamental changes in how these instruments are processed (systems and processes). It seems likely that some form of legislation will be enacted in Europe to force the industry down this route, and what happens in the US will no doubt be key to this.

Recent Projects

Bluerock Consulting has become known over the last few years for its ability to help clients think through and deliver liability driven investment (LDI) solutions, whether that be within asset managers or pension schemes. Working closely with Bluerock Consulting, we have been working on a number of projects in the asset management space, including the design and implementation of LDI solutions for large and mid-tier asset managers, and DB pension schemes.

Other examples of work that we've undertaken recently in the asset management space includes development of five year strategic plans for the asset management arm of the UK's largest friendly society, creation of a derivative operating model for one of Europe's largest asset management companies, and launch of cash plus and other funds for a large multi-national asset manager.

Get in Touch

If you have experience in the asset management sector as a project/programme manager, SME or business analyst and are interested in finding out more, we'd love to hear from you. Please get in touch at info@bluerock-resourcing.com