Future of Fund Management

The power of money to stabilize many economies is true to a great extent; however, there are other contributing factors today. With the share of bigger corporations emerging, smaller enterprises are being absorbed along with a huge client base. The fear of exiting the market due to high leaning on the find performances has made medium companies battle fierce competition or just move out of the industry.

Reason for stiff competition

Milking the cash cows is how the industry is thriving for survival, the more innovative the financial product is, and higher is the definitive growth pattern:

  • the dominance of alternative investments are taking away the larger portion of the pie making it harder for the passive investment trends
  • a bigger scope of resources gets a larger portion of investments from the fund managers, with good EBITA and effective cost management, investment portfolios are being trimmed to have a mix of nontraditional funds to get the profits sooner and sustain for a longer tenure
  • a lot of effort and amount is invested in new innovation, new product launches, as the life cycle of financial products, is short-lived it makes the most of it now
  • the demand from the clients for a high performing asset in their portfolio is driving the fund managers to an edge to sustain their growth along with compliance with many regulations
  • With the mergers of many companies, to strengthen their presence in the markets and be the winner, it is essential to spread the cost incurred in the acquisition and get a good margin, else will be left with diluted profits, uneven management of talent and money.

Overcoming the tide

The focus for many investment based companies is to stay and wade over the rough tide since the year 2006 when the financial crisis really hit the markets globally,

  • maintain a good liquidity ratio
  • combating the negative market forces
  • curb the rising cost of maintaining the financial products
  • the high amount of fees paid to fund managers to tap into new customers
  • new technology and regulation to be adhered to
  • rising administrative cost which often makes the investors withdraw their funds and invest elsewhere as their returns are eaten up
  • constant reassessment of the financial products so that they are giving a good performance

With all the challenges ahead, financial products are still going to be highly invested area as there is no anvil from the banks with a very low-interest percentage offered on deposits.