February 13, 2024 — Volatile markets, a boom in private assets and a continuing long-term decline in profit margins are just some of the challenges facing asset managers in markets around the world. Baked into all these issues is technology innovation that is unfolding at breakneck speed, creating both opportunities and potential pitfalls for managers.
“Our industry analysis finds that asset management firms are discovering new opportunities for growth by harnessing the power of artificial intelligence (AI) and other technology to create new value for clients in the form of “service alpha” and by staking out a growing presence in private markets,” says Mark Buckley, Head of Investment Management at Coalition Greenwich. In a report released today, Top Trends in Asset Management for 2024,
Coalition Greenwich pinpoints the most important trends helping to determine winners and losers in this increasingly complicated environment, including:
- Private Markets: Opportunities for Traditional Managers: Over the next three years, 40% of institutional investors around the world plan to increase allocations to private debt. More than a third expect to boost private equity allocations, and about 30% plan to expand allocations to private infrastructure equity. Coalition Greenwich analysis shows that when it comes to private investments, institutional investors do not necessarily have a strong preference for specialist firms.
- AI: From Experimentation to Use Cases: Asset managers in 2024 will move from experimenting with exciting new AI applications to rolling out use cases that deliver real value to their clients and to their own businesses. Asset managers looking to generate strong returns on their AI investments in 2024 and beyond should consider focusing more of their development and implementation budgets on easing key client ‘pain points’, such as friction in the onboarding process,
- Service Quality: A Focus on “Service Alpha”: Institutional investors are aware of the growing variation in service quality among the asset managers they employ. In 2024, expect growing numbers of institutional investors to prioritize the concept of “service alpha,” or the client service value that managers provide.
Top Trends in Asset Management for 2024 examines other trends including a renewed focus on the basics in product management and the growing importance of strategic partnerships. It also analyzes how asset managers might approach the increasingly complex issue of ESG amid a divergence in practices and perceptions between the U.S. and the rest of the world.