Ir­ish as­set manag­ing value ‘to hit €7trn’

Irish Independent - - Business - Gavin McLough­lin

PWC projects that as­sets un­der man­age­ment in Ire­land have the po­ten­tial to grow to €7trn by 2025, from €4trn last year.

The ac­coun­tancy gi­ant has con­ducted a global study of the in­dus­try and be­lieves a shift to­wards ar­eas where Ire­land per­forms well means there are promis­ing prospects for the in­dus­try here.

“Shifts in global in­vest­ment pat­terns to pas­sive and al­ter­na­tives, where Ire­land punches well above its weight, will fur­ther fuel growth in Ire­land,” said Ol­wyn Alexan­der, PwC global as­set and wealth man­age­ment leader.

“How­ever, with the un­cer­tain­ties caused by Brexit and other geopo­lit­i­cal chal­lenges, we can­not be com­pla­cent. Tech­nol­ogy, and par­tic­u­larly the rise of AI and ro­bot­ics, pro­vides great op­por­tu­ni­ties to fur­ther man­age the cost base and de­liver even bet­ter prod­ucts to con­sumers,” she added.

The re­port projects global as­sets un­der man­age­ment will grow to $145.4trn (€125trn) in 2025 – com­pared to $84.9trn (€73trn) last year.

It pre­dicts so-called “pas­sive man­age­ment” to grow to 25pc of global as­sets un­der man­age­ment by 2025.

This is an in­vest­ment strat­egy de­signed to track the per­for­mance of a par­tic­u­lar mar­ket, com­pared to ac­tive man­age­ment where man­agers try to beat the mar­ket. Ac­tive man­age­ment is seen fall­ing to 60pc from 71pc.

“In the on­go­ing de­bate of ac­tive ver­sus pas­sive in­vest­ing we are op­ti­mistic for both. While we an­tic­i­pate a faster pace of growth for pas­sives due to ris­ing al­lo­ca­tions, we still pre­dict growth in ac­tive in­vest­ments, which will con­tinue to pre­serve ac­tive man­age­ment’s dom­i­nant mar­ket share,” Ms Alexan­der said.

“It is im­por­tant to re­mem­ber that in a ris­ing mar­ket, pas­sive re­turns are very at­trac­tive at a low cost but that in­evitable mar­ket cor­rec­tions will bring a con­tin­ued ap­pre­ci­a­tion for the value of ac­tive in­vest­ments.

“Both will be key build­ing blocks in bal­anced port­fo­lios to meet spe­cific in­vestor out­comes.”

The re­port projects ”al­ter­na­tive as­set classes” – in­clud­ing pri­vate prop­erty, pri­vate eq­uity and pri­vate debt – will more than dou­ble in size by 2025 to ac­count for 15pc of as­sets un­der man­age­ment. PwC is also pre­dict­ing that the in­dus­try’s in­volve­ment in niche ar­eas like peer-to-peer lend­ing and in­fras­truc­ture will in­crease sub­stan­tially. It warns fund man­agers to be cog­nisant of de­vel­op­ments in tech­nol­ogy, and says they should de­sign new prod­ucts to meet chang­ing needs.

“Ma­chine learn­ing and AI are set to change the way re­search and port­fo­lio man­age­ment is con­ducted and ro­botic process au­to­ma­tion will rev­o­lu­tionise the back and mid­dle of­fice.”

Lloyd Blank­fein, chair­man and chief ex­ec­u­tive of­fi­cer of Gold­man Sachs Group. In­set, the Gold­man Sachs build­ing un­der con­struc­tion in Lon­don

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