A majority of alternative investment managers (57 per cent) are optimistic about their firm’s prospects over the next three years, according to a poll released by SEI.
The poll, conducted at SEI’s annual CFO Forum for Alternative Investment Managers in London, found that positive market prospects were the main reason behind this optimism. However, the remaining participants (43 per cent) were concerned about their firm’s prospects, marking a substantial increase from the minority (12 per cent) who expressed concern in a similar poll conducted in April.
Of those with a pessimistic outlook, most cited negative market prospects, weak branding, and uncompetitive performance as prominent concerns. Additionally, 44 per cent of participants revealed that economic uncertainty will be the most significant challenge facing the industry in the near future.
Also weighing heavily on the minds of investment managers is the regulatory climate. Two-thirds (67 per cent) of those polled listed regulation as a critical consideration in domicile selection. Furthermore, respondents argued that satisfying regulatory requirements is their firm’s greatest operational challenge, even more so than satisfying investor expectations.
However, managers still have their focus on investors, especially given that a majority (55 per cent) indicated that investor confidence is worse or has not improved since the aftermath of the financial crisis. Conversations at the forum touched on the heightened due diligence managers are facing, as well as the increased transparency investors are looking for when it comes to understanding where and how returns are generated.
“Optimism is understandably tenuous at present since investment managers are facing an empowered investor base, an avalanche of regulations, and an uncertain economic climate.” says Phil Masterson (pictured), Managing Director for SEI’s Investment Manager Services division. “However, it’s reassuring to see that firms continue to focus on the future and work on identifying growth opportunities. It is clear that managers are under pressure and need help from their partners in order to focus on their core business and ultimately thrive in the uncertain economic climate and unrelenting regulatory environment.”
When identifying where they see opportunities, respondents pinpointed institutional assets as the biggest contributor to future growth, with only 11 per cent believing organic growth would be a key factor. When focusing more specifically on the investor types or channels that promise the greatest growth, investment managers cited pension plans. The vast majority (73 per cent) also stated that there will be a substantial increase in interest towards hedge fund compliant UCITS funds over the next year.
The poll was completed by CFOs, COOs, and senior executives across management operations, distribution, and investment professions.