TODAY, UBS GLOBAL ASSET MANAGEMENT formally released it newest white paper, Evolution of the Asset Manager, which looks at the evolution of the asset manager over time and the changes the asset management industry has seen in response to economic, demographic and industry-specific pressures. UBS Global Asset Management outlines the changing face of asset management; both by dissecting driving factors from the 1990s, highlighting current and potential forthcoming trends and by analyzing the impact of evolutionary pressures. Authored by Curt Custard, Head of Global Investment Solutions, and Matthew Richards, Strategist, Global Investment Solutions, the piece identifies key trends that aim to help asset managers help their clients set realistic goals and work smarter, in a more innovative capacity, to meet them. Examining how investors are currently driving into bonds similar to the earlier shift into equities unearths behavioural tendencies in a similar fashion to the continued tendency for investors to look to previous year’s performance as an indicator of the future. However, key differentiating factors outlined in the paper indicate that over time many changes have developed within asset management as it relates to investment content, product categorization, investment teams, client base and distribution teams. Historically product categorization was organized largely by asset class and management style, but through time it has grown more popular to categorize largely by risk return profile, outcome and factor exposure. Similarly, investment content has also developed; finance has gone from being seen as “science” to being seen as adaptive and incorporates behavioral finance. Sample takeaways from the new report include:
- Emphasis is moving away from performance relative to benchmarks and toward investor outcomes such as income generation and avoiding large drawdowns (i.e. peak-to-trough losses.)
- The secular bull run in bonds is approaching its natural limit as government bond yields in the US, Japan, Germany and the UK move closer to zero.
- The assumptions behind the Capital Asset Pricing Model (CAPM) and Modern Portfolio Theory (MPT), two academic models that have been widely used in the investment industry, look increasingly unrealistic.
- The focus is also shifting from specific asset classes to holistic solutions to meet investors’ needs.
- Investors based in emerging markets make up a growing proportion of the industry’s client base and have different characteristics to those based in developed markets.
UBS Global Asset Management is a large-scale asset manager with well-diversified businesses across regions, capabilities and distribution channels. It offers investment capabilities and investment styles across all major traditional and alternative asset classes. These include equity, fixed income, currency, hedge fund, real estate, infrastructure and private equity investment capabilities that can also be combined into multi-asset strategies. The Fund Services unit provides professional services including legal fund set-up, accounting and reporting for traditional investment funds and alternative funds.Invested assets worldwide totalled some CHF 569 billion (EUR 473 billion, GBP 382 billion, USD 599 billion) at 30 June 2012. The firm is a leading fund house in Europe, the largest mutual fund manager in Switzerland and one of the largest fund of hedge funds and real estate investment managers in the world. With around 3,700 employees, located in 25 countries, we are a truly global firm. Our principal offices are in London, Chicago, Frankfurt, Hartford, Hong Kong, New York, Paris, Singapore, Sydney, Tokyo and Zurich. Notes to Editors UBS draws on its 150-year heritage to serve private, institutional and corporate clients worldwide, as well as retail clients in Switzerland. Its business strategy is centered on its pre-eminent global wealth management businesses and its universal bank in Switzerland. Together with a client-focused Investment Bank and a strong, well-diversified Global Asset Management business, UBS will drive further growth and expand its premier wealth management franchise. UBS is present in all major financial centers worldwide. It has offices in 57 countries, with about 35% of its employees working in the Americas, 36% in Switzerland, 17% in the rest of Europe, the Middle East and Africa and 12% in Asia Pacific. UBS employs about 65,000 people around the world. Its shares are listed on the SIX Swiss Exchange and the New York Stock Exchange (NYSE).