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CNN Money – Money managers must offer new portfolios and keep cutting costs to survive in an era where frightened investors prefer safer fixed-income funds to stock and hedge funds, a report released Monday showed.
Badly bruised by last year’s financial crisis when tumbling markets and investor redemptions shrank global assets 18 percent to $48.6 trillion, asset managers face more tough times in 2009 and the years ahead, The Boston Consulting Group wrote in its seventh annual asset management industry survey.
Profits will shrivel again, likely falling to 30 percent or less this year from 34 percent at the end of 2008 and 38 percent at the end of 2007, the consultants forecast.
Forbes – Consolidation in the asset management industry is set to intensify as encroaching regulation and client demands for independence force banks to hive off fund arms, Barclays said on Friday.
Major investment banks were finding it ever harder to keep hold of their fund divisions, Barclays President Bob Diamond told a conference call after agreeing to sell Barclays Global Investors to BlackRock for $13.5 billion.
‘The investment management industry is in early days of consolidation… We’ve made a clear decision that this trend is in place for a while and that is around independence,’ he said.
Bloomberg – Hedge funds may increase assets by more than 8 percent this year as clients led by pension plans and rich families invest $50 billion of the cash they held while financial markets fell, according to a report by Barclays Plc.
Investors have about 14 percent of their assets in cash, according to the survey released today by Barclays Capital, the investment-banking unit of London-based Barclays. Almost 80 percent plan to allocate money to hedge funds in 2009.
“We are seeing that investors are now realizing that hedge funds are surviving as a compelling investment proposition and as an important segment of the broader asset-management industry,” Andrea Gentilini, the New York-based author of the report, said in a telephone interview.
Reuters – Hedge fund and traditional money management firms hard hit by last year’s market meltdown are poised for a surge of mergers and acquisitions to bolster depleted assets and widen sources of revenue.
"We’re going to see a massive wave of consolidation across the entire asset management industry, over the next 12 to 24 months," Brian Reilly, Barclays Capital’s head of asset management investment banking, told a gathering of hedge fund executives at the SkyBridge Alternatives Conference.
