Asset managers performed well in 2012 which may be surprising given the continued uncertainty plaguing the eurozone, the threat of the US fiscal cliff and a general lack of opportunities in mature markets. Even so, with a few exceptions, asset managers have outperformed broader indices by a country mile.
Part of this strength can be attributed to a greater level of resilience in financial markets. True, volatility continues to cause chaos to investment models from time to time, but while investors remain unhappy about the eurozone, the fiscal cliff and weak or zero growth, they are at least coming to terms with the situation. Some have been attracted towards more defensive lower-margin mandates, while others have continued to be attracted by the returns offered in emerging markets.
Looking ahead to get a feel for what will happen in the coming year that will have a bearing on investor sentiment is hardly an easy task given the unexpected developments in 2012. However, what remains clear is that a fiscal tightening in the US will act as a drag on economic growth, although there is always a possibility that sentiment elsewhere – even in Europe – will improve. Unsurprisingly, investors have sought the comfort of low-risk/low-return investments, and many institutional investors have gone one stage further by simply parking funds on deposit.