The market for investment management is subject to constant disruption, and as the most recent wave of competitive, economic and regulatory change washes over the sector, only the most resilient providers will survive. The ferocity of this upheaval means many in the sector have had little time to acclimatise, and only now the dust has started to settle on the past year can we see which names have emerged all the better for it.

The World Finance Investment Management Awards pick out the brightest names in the business and offer an insight into where the future of the sector may lie. Times are most certainly challenging for the sector, although the following names are proof there are many more opportunities for the taking. According to Asset Management 2020: A Brave New World, a recent report compiled by PwC: “The future is bright. Few people in the asset management industry would have shared this sentiment in 2008 or 2009. Not many believed it even as asset prices recovered in 2010-12. However, changing markets and investor needs will combine to produce a positive environment and huge opportunities for asset managers through 2020 and beyond.”

As much as stagnant growth and the low interest rate environment have stifled investors, more important to investment managers is the impact of technology, the shift in global wealth, and the role of risk management in writing investment strategies. Increasingly, clients are placing more of an emphasis on security, and managers have responded by looking more to the long term. Falling oil prices, a US interest rate rise and continued monetary loosening in Europe have all given investors good reason to be concerned, yet these factors equate to very little when put alongside the paradigm shift that is taking hold in the investment management sector.

Change of scene
“Many basic axioms that governed investor behaviour and the operation of the industry have long since been discredited”, read EY’s Global Wealth and Asset Management Industry Outlook 2014 report. “Capital preservation has become the new mantra, particularly for the huge market of babyboomers entering retirement, as well as for institutions and government agencies managing their pensions. The bubble markets of the last decade are in the past and will not likely recur to the same extent in the near future. This means that double-digit investment returns will be exceedingly rare, and the traditional core markets of the US and EU may be approaching terminal mediocrity. Those firms that fail to adjust will face severe challenges to continued profitability and growth. Under the new paradigm, success will be determined by how managers can solve several key challenges.”

Technology, risk management and a shift in global wealth look set to continue reshaping the investment management industry

Volatility over the past year has spiked across a number of key asset classes. Oil prices in particular have plunged, and so too have the economies that depend on them. Emerging market currencies have largely fallen against the dollar and a commodity oversupply together with weak demand is again keeping a lid on prices. All this in a low-growth, low-inflation context has made risky assets appear all the more attractive. However, managers must take care to balance these risks accordingly.

“The major risk is that of a strong demand recovery, with growth picking up too rapidly and interest rates rising too quickly as a result, in turn challenging the valuation position of credits and equities”, wrote Chris Cheetham, Global CIO of HSBC Global Asset Management, in a recent report. “The reverse risk is that of slipping into a severe secular stagnation – weak global growth and negative real interest rates – brought on by weaker growth in China and other emerging markets.”

While it’s safe to say the likelihood of these risks actually occurring is relatively low, a recent spate of volatility has given managers and clients good reason to take precautions. This isn’t necessarily to say there is any one answer to the situation gripping the investment management sector, as there is room for firms of all shapes and sizes to succeed: big or small, diverse or niche, the level of disruption in recent times has given rise to a new multifaceted marketplace where there is room for all manner of strategies.

A transforming industry
This expanded scope for doing business means many things, chief among them that the industry stands on the precipice of game-changing transformations. With a predicted compound annual growth rate of near six percent between now and 2020, global investable assets in the asset management industry are set to exceed $110trn, according to PwC, meaning investment managers can ill afford to take an eye off any one of the latest industry developments.

Deloitte’s 2016 Investment Management Industry Outlook report, which looked at the disruptive forces shaping the investment management industry, noted: “Making predictions is an inexact science at best, but we are seeing the emergence of a number of dynamics that have great potential to fundamentally change the investment business over the next three to five years.” Technology, risk management and a shift in global wealth, according to the report, look set to continue reshaping the investment management industry. “It will be the ability of each investment manager to identify the disruptive trends, prioritise, and implement an appropriate response. Those that take action will continue to thrive.”

The sheer number and complexity of the challenges at hand mean that few – if any – in the investment management industry can truly understand what’s at stake, never mind what it takes to succeed in today’s climate. There is a general understanding, however, that the industry is ripe for disruption, and only those willing to embrace the latest developments will emerge the other side all the better for it.

It should be said that the outlook for investment management is mixed, both in terms of performance and in terms of market developments – though judging by the winners of this year’s Investment Management Awards, many investors might well feel bullish about what the future holds.

The World Finance Investment Management Awards offer an insight not only into what it takes to succeed in today’s market, but into the ways in which the industry is likely to change in the coming years. By looking at a wide cross-section of performance indicators, the judging panel at World Finance, together with our readers, have picked out the brightest names in the business.