Saudi students excel at ISEF 2024, claim nine special awards    Garuda incident has no impact on Hajj pilgrim transport, NTSC says    Saudi Arabia's RGA implements innovative road technology for Hajj season    Russia not seeking Kharkiv capture, claims Putin    Star golfer Scottie Scheffler arrested over alleged assault on police officer    Saudi Arabia joins International Agency for Research on Cancer    French police kill man trying to burn Rouen synagogue    US confirms first aid trucks arrive via Gaza pier    Israel accuses South Africa of false claims at ICJ    Row erupts over portraits of Australia's richest woman    Al-Ittihad's victory drought continues, misses chance to qualify for ACL elite    Al Ittihad CEO frustrated with 'not positive' SPL feedback, announces internal assessment    Saudi Arabia, US forge new pathways in energy cooperation with roadmap    Saudi taekwondo team makes history with first Asian championship golds    Cognite Data Fusion now available on Google Cloud in Saudi Arabia    Franco-Saudi seminar sparks new initiatives in railway and smart mobility development    Crown Prince: Saudi Arabia supports establishment of an internationally recognized Palestine State Security of the Red Sea region highlighted as Arab Summit begins in Manama    British Airways resumes flights to Jeddah after five-year break    Indian spices face heat over global safety concerns    Glioblastoma: Top Australian doctor remains brain cancer-free after a year    JK Rowling in 'arrest me' challenge over hate crime law    Trump's Bible endorsement raises concern in Christian religious circles    Hollywood icon Will Smith shares his profound admiration for Holy Qur'an    We have celebrated Founding Day for three years - but it has been with us for 300    Exotic Taif Roses Simulation Performed at Taif Rose Festival    Asian shares mixed Tuesday    Weather Forecast for Tuesday    Saudi Tourism Authority Participates in Arabian Travel Market Exhibition in Dubai    Minister of Industry Announces 50 Investment Opportunities Worth over SAR 96 Billion in Machinery, Equipment Sector    HRH Crown Prince Offers Condolences to Crown Prince of Kuwait on Death of Sheikh Fawaz Salman Abdullah Al-Ali Al-Malek Al-Sabah    HRH Crown Prince Congratulates Santiago Peña on Winning Presidential Election in Paraguay    SDAIA Launches 1st Phase of 'Elevate Program' to Train 1,000 Women on Data, AI    41 Saudi Citizens and 171 Others from Brotherly and Friendly Countries Arrive in Saudi Arabia from Sudan    Saudi Arabia Hosts 1st Meeting of Arab Authorities Controlling Medicines    General Directorate of Narcotics Control Foils Attempt to Smuggle over 5 Million Amphetamine Pills    NAVI Javelins Crowned as Champions of Women's Counter-Strike: Global Offensive (CS:GO) Competitions    Saudi Karate Team Wins Four Medals in World Youth League Championship    Third Edition of FIFA Forward Program Kicks off in Riyadh    Evacuated from Sudan, 187 Nationals from Several Countries Arrive in Jeddah    SPA Documents Thajjud Prayer at Prophet's Mosque in Madinah    SFDA Recommends to Test Blood Sugar at Home Two or Three Hours after Meals    SFDA Offers Various Recommendations for Safe Food Frying    SFDA Provides Five Tips for Using Home Blood Pressure Monitor    SFDA: Instant Soup Contains Large Amounts of Salt    Mawani: New shipping service to connect Jubail Commercial Port to 11 global ports    Custodian of the Two Holy Mosques Delivers Speech to Pilgrims, Citizens, Residents and Muslims around the World    Sheikh Al-Issa in Arafah's Sermon: Allaah Blessed You by Making It Easy for You to Carry out This Obligation. Thus, Ensure Following the Guidance of Your Prophet    Custodian of the Two Holy Mosques addresses citizens and all Muslims on the occasion of the Holy month of Ramadan    







Thank you for reporting!
This image will be automatically disabled when it gets reported by several people.



Middle East AUM dives 10% in 2015
Published in The Saudi Gazette on 05 - 09 - 2016

The global growth of asset management stalled as the industry in 2015 recorded its worst year since the 2008 financial crisis, according to a report by The Boston Consulting Group (BCG) titled "Global Asset Management 2016: Doubling Down on Data". Growth in assets under management (AuM) stalled — or in the case of the Middle East declined 10% — and net new flows of assets, revenue growth, and revenue margins all dipped lower in 2015, BCG's fourteenth annual benchmark report on the industry said on Sunday.
Asset managers' future prosperity and competitive advantage will require them to shift from outdated product strategies and develop disruptive investment capabilities using leading-edge data and analytics, the report emphasizes.
The lack of overall growth was due largely to the generally negative and turbulent performance of global financial markets, which failed to buoy the value of invested assets as in prior years. Net new asset flows remained tepid. At the same time, the rising value of the US dollar reduced values of non-US assets in dollar terms. In addition, institutional managers have divested assets to outbalance government deficits.
The Global value of AuM rose just 1% in 2015, to $71.4 trillion from $70.5 trillion in 2014, after growing 8% that year, and at an average annualized rate of 5% from 2008 through 2014, the report said.
"Weak and turbulent global financial markets are today's reality—one recent example being the market response to Britain's ‘Brexit' vote to leave the EU," said Ihab Khalil, a Partner and Managing Director at BCG Middle East. "Asset managers that depend on financial-market performance to drive increases in asset values are stuck in a model from the past. And while it is true that clients focus on returns, they also expect more," it said.
The industry's regional growth, as measured by AuM, reflected in large part the performance of capital markets by region in 2015. AuM decreased in North America and the Middle East but rose elsewhere. Growth was modest in Europe and strong in Latin America and Asia, excluding Japan and Australia. The 10% growth of AuM in Asia, excluding Japan and Australia, was relatively robust, but once again, it trailed the rapid expansion of the region's private wealth.
Net new flows of assets—the lifeblood of the industry's growth—also varied widely by region. Flows were tepid in the U.S. but more robust in much of Europe and Asia-Pacific, where they reached almost 2.5% and 3% of 2014 AuM, respectively. This performance marked a recovery of net flows in France, the Benelux countries, and Eastern Europe and continued positive momentum in Germany, Spain, and Italy. In Asia-Pacific, China and India were among the markets where net flows exceeded 10% of prior-year AuM.
While asset management continues to be highly profitable, the 2015 results underscore the continuing dependence of many managers on rising financial markets to boost asset values rather than on long-term competitive advantage to generate strong net new flows, the report further said.
"The lack of market growth in 2015 reinforces the urgency faced by managers to pursue a step change in capabilities," explained Markus Massi, Partner and Managing Director of BCG Middle East's Financial Services practice and leader of the asset management topic. "Deep expertise, grounded in advanced data and analytics, will define competitive advantage and enable some managers to prevail."
Advanced and sometimes disruptive technologies—including machine learning, artificial intelligence, natural-language processing, and predictive reasoning—are on the verge of joining the mainstream asset managers, according to the report. Early-moving firms and financial-technology providers are beginning to model scenarios that push the boundaries of traditional analytics.
"As a result, today's managers face a fundamental need to augment their investment processes by developing advanced capabilities in these digital technologies and practices," Massi noted."The alternative, for most firms, is to risk becoming irrelevant and trailing others in the ability to generate superior investment returns, or alpha."
Keeping up with the competition in that race to harness new technologies will require significant changes to almost all elements of a firm's operating model, the report says. One example of these changes is how firms approach data, including its management, governance, and architecture.
Crucial to that endeavor is the development of a target operating model, the blueprint of an asset manager's ideal future state, to which the report devotes a full chapter.
The report also detailed the rising regulatory pressure on asset managers, noting that many players still need to develop a truly comprehensive risk management framework.
"Global regulators' approaches to risk management in asset management are beginning to converge, giving firms a clearer view of appropriate risk investments," Khalil said. — SG


Clic here to read the story from its source.