The asset management industry will continue to be challenged by increased fee pressure in 2016, providing further momentum for passive investment strategies, says global analytics firm Cerulli Associates.
A recent article titled Global Asset Managers Rising to Challenges of 2016, Cerulli Associates said asset managers will need to find ways to place downward pressure on fees.
Within Asia, Cerulli said the spotlight will fall on passive products as institutions look for cost-effective solutions.
As a result, the firm predicts that investors will have greater access to cross-border investment options, enabling managers to expand into different markets.
Cerulli Associates managing director, Europe, Barbara Wall said rising fee pressure has seen many European active managers move into the ETF space.
“In Europe, as with much of the world, the downward pressure on fees, fuelled by passives, the comparisons platforms enable, and regulators will not let up in 2016,” said Ms Wall.
“Asset managers are responding – the move by veterans of active management into ETFs is an example.”
Ms Wall pointed out that while Europe only accounts for 18 per cent of the global ETF market, this is likely to change. She said the number of ETFs now offered have helped to raise the profile of the products among retail investors.
Further, Ms Wall argued that the “clamour” for reduced fees and greater transparency will remain and competition within the industry likely to intensify throughout the year.
“All the while, activist investors will not let up; markets will continue to surprise; and rising costs will strain budgets.”