It’s no secret that asset managers have struggled with higher interest rates, as the increasing allure of cash acts as a drag on funds managed by investment firms of all stripes. However, there have been tentative signs in the summer results season that the situation is starting to ease for the sector, and that outflows have narrowed as 2023 has progressed.
- Ample funds to invest
- Exits despite tough conditions
- Quasi-state entity
- Positive political backdrop
- Redemption risks
- Few direct comparators
The main reasons appear to be increased investor confidence in the economic backdrop, as well as the realisation of the limited appeal of staying in cash with inflation still in the high single digits. That said, asset managers cannot rely on macro factors to tempt investors to buy their shares. These days, size is seen as a disadvantage, which only really leaves specialisation and geographic focus as sources of differentiation.