Increasing Complexity Driving Global Asset Managers to Seek New Skills, Deeper Partnership with Index Providers, Finds IIA Survey
August 20 2024 - 8:00AM
Business Wire
The Index Industry Association (IIA) today announced the results
from its fourth annual Survey of Global Asset Managers. The Survey
reveals that “forces of change” including the economic environment,
the rise of AI, changing views on ESG, and the emergence of private
markets are driving complexity for managers. Addressing these new
challenges will require new skills, resources, and broadening
alliances with index providers whom managers view as increasingly
valuable partners.
“Asset managers globally are grappling with both short-term
volatility and more profound, longer-term structural forces tied to
technological innovation and the growth of new markets,” said IIA
CEO Rick Redding. “While each of these forces has its own drivers
and momentum, together they add up to an asset management
environment of growing complexity with new areas of risks and
opportunities.”
The IIA’s 2024 Survey of Global Asset Managers offers a unique
glimpse into how asset managers view progress against current
challenges and opportunities as well as into the key factors
shaping the longer-term evolution of the industry. Now in its
fourth year, the IIA survey, conducted independently by research
firm Opinium, identifies, tracks and tests key trends in the asset
management industry by surveying 300 Chief Financial Officers
(CFOs), Chief Investment Officers (CIOs) and portfolio managers
across Europe and the US.
Generative AI Creating Buzz, Optimism
Asset managers are enthralled by the possibilities afforded by
generative AI. Two-thirds say that generative AI/machine learning
is the topic raised most frequently by their firms and colleagues
over the past 12 months.
Respondents report already using generative AI tools, including
virtual assistants, in many areas of asset management, from
providing personalized financial advice based on transaction
history, to analyzing market news and trends to identify and
research investment opportunities, to optimizing portfolios, and
assessing market risk.
Changing ESG Dynamics
Managers’ expectations about the growth rate of their ESG
portfolios declined somewhat from 2022/23 survey levels. Asset
managers now expect that, in 2025, 27.5% of their portfolios will
contain ESG elements, rising to 33.9% by 2027, compared to the
previously forecasted 48.2% and 57.4% respectively. Similar
adjustments are also evident at the ten-year time horizon.
But ESG still figures prominently in asset managers’ thinking
and strategy. More than half (51%) pointed to sustainable investing
as the topic most frequently mentioned by their firm and colleagues
over the last year. And 39% consider it to offer an opportunity for
their business, while only 17% consider it a challenge. UK and
German asset managers were particularly optimistic, with 56% and
47%, respectively, considering it an opportunity.
Private Markets Both an Opportunity and Challenge
Despite the growing prominence of private markets, asset
managers are polarized over whether private markets are an
opportunity (37%) or a challenge (29%). US asset managers are
notably more positive, however, with 45% considering private
markets to be an opportunity. CIOs are also significantly more
positive (opportunity 46% / challenge 29%).
Index Providers Viewed as Valuable Partners for Navigating
Changing Industry
Asset managers increasingly see index providers as important to
their success. More than half (52%) say that index providers and
their services will become more important to their firm’s success
over the next 12 months. Demand seems set to climb appreciably,
with 20% of asset managers expecting to increase their use of index
providers over the next 12 months and only 6% expecting a
decrease.
Reflecting the steady drift toward AI and the emergence of new
asset classes, asset managers would like to see more technology
integration and specialization from index providers. Notably, asset
managers would like to see the application of AI in indexes (27%),
the development of more customized indexes (25%), direct indexing
solutions and support (24%), and thematic and sector-specific
indexes.
“This year’s survey highlights global asset managers’ varied
views of the risk and opportunities around AI, ESG and the
development of new markets,” notes Fiona Bassett, IIA Chair and
FTSE Russell CEO. “Whatever their views, asset managers identify
index providers as valuable partners and a critical source of
innovation which is a strong signal of continued growth for the
entire ecosystem around indexing.”
Findings from the 2024 Survey of Global Asset Managers can be
found on the IIA’s website.
About the IIA
Many of the leading independent index providers in the world are
members of the IIA, including Bloomberg Indices, CBOE Global
Indices, the Chicago Booth Center for Research in Security Prices
(CRSP), China Bond Pricing Co. Ltd., China Securities Index Co.
Ltd., FTSE Russell, Hang Seng Indexes, ISS-STOXX, JPX Market
Innovation and Research (Tokyo Stock Exchange), Korea Exchange,
Morningstar, MSCI Inc., NASDAQ OMX, Parameta Solutions, Shenzhen
Securities Information Co. Ltd., and S&P Dow Jones Indices
LLC..
IIA members administer over three million indices for their
clients, covering many asset classes, including equities, fixed
income, and commodities. Part of the IIA’s mission is to consider
ways to promote best practices for index providers, which makes it
a natural supporter of appropriate and proportionate industry
standards. Our members are dedicated to promoting transparency,
competition, sound operational practices, intellectual property
rights, education, and effective index management practices. IIA
members are independent index administrators who neither trade the
underlying component securities of their indices nor directly
create products for investors. Moreover, our members publicly make
available their methodologies and explain how their indices are
created, calculated, or maintained.
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Mandy Boyd, Buttonwood Communications mboyd@buttonwoodpr.com