Success of the Fittest: A Swift Survey of Shifts in Asset Management

This report has been written at a time of uncertain outlook for the global economy and financial sector as a whole. This uncertainly will continue for the foreseeable future. The sovereign debt crisis in Europe has expanded into a Euro-zone crisis,which has impacted financial confidence throughout the world. The sovereign debt crisis and the Euro-zone crisis illustrate how cross-border investment can produce major systemic risk for national and international financial systems, financial market participants and end investors. The crisis highlights the competing political and national interests both inside and outside the Euro-zone. Euro-zone politicians are trying to resolve both crises in a way which will minimise systemic risk and consequent disruption to the financial markets. The routes to long-term resolution of the crises are protracted. The financial and economic uncertainty affects the asset management industry as much as any other segment of the financial services sector. The overriding uncertainties are reflected in this report.

This report is set out in five major sections:

• Section I explores the macro-economic climate.
• Section II examines the current industry environment.
• Section III examines “the moral issues" which the asset management sector is facing. Most of “the moral issues” are common to other sectors of the financial services industry.
• Section IV looks at key trends in asset management.
• Section V analyses the current fitness of the asset management industry, challenges to its fitness and how to address these challenges. It includes a review on the importance of the fitness of the asset management sector in a geographical and regional context.

The conclusions are followed by some brief predictions for the industry over the next three to five years.