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Posts Tagged ‘Index Trackers’

The investment- management industry faces a big squeeze

Posted by hkarner - 13. Mai 2017

Date: 11-05-2017
Source: The Economist: Buttonwood

It is likely to lead to further consolidation

MAKING money yourself from investing other people’s has been a good business for over a century. Asset managers established a key principle early on: they could charge an ad valorem fee on the amount they oversee. So when markets go up, their fees go up.

But as the title of a recent London Business School conference indicated, investment management is “an industry in disruption”. Abhijit Rawal of PwC, a consultancy, described the sector’s problems as the “four Rs”: returns are low; revenues are being squeezed; regulations are being tightened; and the robots are coming to take away business.

Plenty of potential for growth remains, as workers save for retirement. But the industry faces the same sort of cut-throat competition that technology has caused elsewhere. The oldest challenge comes from index trackers, funds that try simply to match the performance of a benchmark like the S&P 500. It took many decades for such “passive” funds to become widely accepted, but they are rapidly gaining market share. Vanguard, a big passive manager, received more than half of all global fund inflows last year. Den Rest des Beitrags lesen »

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