The $100T Problem Facing Asset Managers

Nov 17, 2023

Many fund managers appear to be bleeding capital as their investor clients seek new strategies.

According to new coverage of the situation from Bloomberg and the Boston Consulting Group, the $100T asset management industry is on the verge of a reckoning. This with warnings that many old mutual fund firms may go extinct in the next few years. 

What’s the issue? What can fund managers and individual investors do to thrive during these changing times?

The Big Capital Shift

Some of these big funds are seeing a major exodus of capital. Like T. Rowe Price, which has lost $127B in capital over the past two years. Or Blackrock, which has seen $13B in withdrawal requests in the past three months. 

Of the additional revenues these companies have enjoyed over the past 18 years, 90% of that is reportedly just from the lift of the recent bull market. This run is believed to be ending and is causing a lot of concern among these funds. 

Much of this capital flight is being blamed on investors seeking less expensive, more passive investment strategies. Meanwhile, the fund managers have failed to create sustainable margins, or new products to meet the desires of their clients. 

How Money Managers Can Do Better 

What are some of the ways various money managers, fund operators, including family offices, and investment groups can do better? Not only to attract new capital, and retain financially strong firms, but to keep their clients too?

Don’t Become Complacent

It is essential to keep on winning that business, even from your existing clients. That means remaining competitive, ensuring they feel valued, and developing new relevant products.

You cannot just sit back and count on bull markets and inflation. Cash flow, and value add ability is vital too. 

It also means keeping up with the features that investors want. Which is why NNG Capital has not only added new hybrid funds, but has begun offering more classes of participation. With features like a 90 day call option. 

Service

Customers of all types may be evaluating their expenses and looking to save on fees today. Though, what really makes it hard for them to justify giving someone their business is not seeing the value, or feeling valued in terms of a good customer experience. 

Trust

There is no replacement for trust. It is so hard to win, so easily lost, and virtually impossible to regain when broken. This factor which may be finally catching up to many large institutions. 

Passive Investment Strategies

Investors are increasingly seeking passive investment opportunities. There may still be a place to have fun with new exotic and unproven markets, just to satisfy curiosity. Whether that is crypto, NFTs, and AI. For financial security and reliability though, having a strong stake in real estate, and cash flow producing passive investments is where it is at. 

Serving The Bulls And The Bears

It is important to step up and lead when you know what’s going on, and how to win in the market. Yet, it is also important to be able to serve others and for their outlook on the market. 

Some are still very bullish, and some segments of the housing market certainly seem to continue to back that up. Others are turning bearish, and are seeking more security, and investments that will thrive in a bear market. 

If you can provide opportunities which offer both wealth preservation and great upside potential, that’s even better. 

 


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Photo by Kelly Sikkema on Unsplash