Asset Management

Whilst the ‘credit crunch' is now just over a year old, the real pain has been felt post 31 August 2008. Until then, whilst prices were down, fund flows were fine and prospects were positive albeit not as bullish as in the last decade.

More recently, flows have dried up with some seeing net out flows as well as investors moving into less risky products which present lower margin to managers. Whilst managers may make reasonable profits in 2008, the prediction for this financial year looks to be a challenging one.

The issues each manager faces varies with most needing to think through the following:

• Consolidation »
  Just as the number of products will shrink, the number of players is likely to fall. This might be restricted to survivors shrinking their global footprint? Or reversing product diversification strategies and returning to core competencies? As in banking and other industries, the strong are likely to get stronger.
  
  
• Fund and or product rationalisation »
  Especially in hedge funds, but also traditional IM. Perhaps as many as half of the world's hedge funds will close.
  
  
• Geographic reach »
  Previous plans by global players to grow into markets such as Australia may no longer be affordable. Alternatively for businesses in positions of strength, this might bring abundant opportunities to acquire, invest or establish joint ventures.
  
  
• Managing the cost base over the next 2 years »
  If new money is limited, which areas of the business do we commit to providing resources? Likewise, in Operations, will transaction levels be reduced?
  
  
• Product options »
  When normal and more stable market conditions return, what sort of product will investors want? As complex as before, or something simpler?
  
  
• Regulatory developments »
  Who knows what will be introduced in the US and through the world. Even if such change is aimed at banking, it may impact hedge funds as well as traditional investment management, administrators etc. Even if it does not, there is potential for the institutionalisation of parts of the market such as hedge funds.
  
  
• Risk management »
  Especially in hedge fund land, but perhaps wider, managers are finding that their risk management systems and practices were designed or operated in a positive environment and do not operate as effectively in the world in which we now live. Risk management is a must have, and no longer a nice to have.

How PwC can advise your business

• Implementation of strategies to improve short term profitability
• Customer retention strategies
• Talent retention strategies
• Regulatory guidance
• Risk Management

We deliver value and advice to financial planners, asset, funds and investment managers, superannuation administrators and corporate and commercial institutions. A key indicator of our reputation in the marketplace and the competency of our teams is the strong relationship we have established with our clients in the areas which we specialise:

• Asset Management
• REITs
• Infrastructure
• Wealth Management
• Alternatives
• Superannuation
• Internal Controls reporting
• Regulatory Reporting

Our diverse range of expertise is reflected in our range of core services. While PwC is widely regarded for the depth and breadth of our Assurance services, the firm offers a full range of Tax and Advisory services to clients operating in the Investment Management arena.

Contact our Investment Management specialists today to find out how we can help your business thrive.