Investors, hungrier than ever for high returns, are forcing asset managers to become more competitive, Reuters reports, citing research from Boston Consulting Group.
The asset management industry is still recovering from the financial crisis and profit margins peaked at 39 percent in 2007, just before markets collapsed, Reuters says. Margins are now at just 33 percent. The volume of managed assets around the world gained 8 percent to $56.4 trillion in 2010, but this was largely the result of equity market gains. New inflows from investors have been weak.
"Investors are willing to pay active managers only if they're going to outperform the market," Gary Shub, one of the study's authors tells Reuters. "The headline is that the investor has become more demanding."
He points out that successful asset managers will attract a growing number of clients, while managers who underperform will shrink.
Wall Street spending billions to prepare for new derivatives market rules. [Deal Book]
Bank of America chief risk officer made $11.4 million in 2010 and then promoted to CFO. [Bloomberg]
FDIC uses clawback rule to punish executives of failed banks. [New York Times]
Wall Street dealers saw more demand for cash to buy all securities except equities in Q2. [BusinessWeek]
Futures day traders and speculators get better tax terms than stock day traders. [DealBook]
GLG introduces flagship Lagrange hedge fund to UK as part of Man Group's expansion into retail. [Investment Week]
UK banking inquiry chief Sam Woods to take new job at Financial Services Authority. [Sky News]
Spain's Santander goes ahead with plans to spin off Argentine unit on US market. [Financial Times]
Goldman Sachs squeezed out of Blackboard leveraged buyout after raising terms. [Bloomberg]
Law firms benefit from Frank-Dodd act as banks, hedge funds seek advice. [Washington Post]