Europe’s largest fund conference, FundForum International is underway in Copenhagen. The agenda features panel discussions on some of the industry’s hot topics, such as ESG, digital and technology.
But what does the future hold for the funds industry? Funds Europe caught up with some of the presenters and attendees ahead of the event.
Justin Onuekwusi of Legal & General Investment Management, Jackie Boylan of Fidelity International, Didier Kayl of Fundsquare, and Shelley Yang of Investao share their views on what trends to expect in the coming years.
Justin Onuekwusi, fund manager and head of retail multi-assets, Legal & General Investment Management
Which asset classes do you think will stand out over the next few years?
We are positive on risk assets into the medium term as we believe the outlook for markets has improved. Legendary investor Warren Buffett was spot on when he said: “You only find out who is swimming naked when the tide goes out.” We believe the likelihood of these structural headwinds triggering a 2008-style credit crisis is partially dependent on the economic cycle. A crisis is more likely around a recession than it is mid-cycle. The ebbs and flows of the cycle therefore have ramifications on the long-term risks.
Over the medium term, we are therefore positive on equities for the following three reasons: (1) Given the short-term weakness in growth, the risk of the economy overheating has reduced, therefore the economic cycle could continue for longer than expected, possibly into 2020 and beyond; (2) There are some indicators that show that credit risks that can become systemic have stabilised for now; (3) China has provided a large stimulus package. If this continues as we expect, our conviction is that the Chinese economy will rebound in the months to come.
Jackie Boylan, head of UK adviser platform, Fidelity International
What does the future hold for financial advice?
There aren’t too many industries where demand outstrips supply as much as it does in financial advice. One of the unintended consequences of RDR was the reduction in advice professionals in the market, and whilst we are now seeing adviser numbers growing there is still a very large advice gap. Of course, the challenge is, how can advisers offer relevant advice at a reasonable price? I strongly believe that the solution does lie with technology, and it does lie with a hybrid of guidance, automation and good old-fashioned human contact. The other big challenge is capturing the massive transfer of wealth that will be coming over the next ten-fifteen years as the baby boomers pass on assets and wealth to their children and grandchildren. Recent research suggests that the generations inheriting this wealth are highly unlikely to keep this money with the current financial adviser.
Didier Kayl, head of business and relationship development management, Fundsquare
What trends do you expect to see regarding big data and data quality within the industry in the coming years?
Holistic information management, an iterative process between data producers and data consumers, including feedback, holds great promise. Exploiting data lakes, which can help solve the issue of diversely structured repositories, will be more common.
New skills will be required. Data experts and those who combine expert understanding of the fund distribution chain with analytical mindsets will be in demand.
As in other sectors, digital points of sales will become ubiquitous. Responding intelligently to this trend will complete the digital transformation of the fund distribution ecosystem.
Shelley Yang, CEO and founder, Investao
How do you think the investment landscape in China will change over the next few years?
One major economic driver is the continued opening of China’s financial markets. It signifies a more inclusive and diversified landscape for investors, especially when we consider the current social evolution themes such as digitalisation, healthcare industry reforms and pension reforms.
The ongoing transformation into a consumption-driven economy will also bring about opportunities in both private and public markets. As we see this economic shift, we can expect better performance from active investments compared to passive managers given the unique capital markets status.
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