This is what Martin Gilbert says about the future for fund management

Aberdeen Asset Management has been big news this week after Credit Suisse sold its stake in the company, raising £200m in the process. 

Before this happened, Martin Gilbert, Aberdeen's CEO, was at a Financial News event last week, talking about the future of the asset management industry. This is what he said, with its implications on where to position yourself for a fund management job in Scotland.

1. It's all about relative performance 

Clients don't want absolute peformance, they want relative performance, said Gilbert. "While we would all love it to be absolute, it is on relative performance that we are measured and on which we are hired and fired."

2. There are two killers for a fund management firm: under-performance and instability in terms of employees 

"As long as you do a reasonable job – you do not have to be the best in the asset class – they tend to stick with you," said Gilbert. "Asset management firms tend to get fired when they underperform dramatically for a period of time, and have instability in the organisation. You can perhaps sustain either instability or underperformance but not both."

3. Money market funds look like a potential growth area

"Money market funds are interesting because clients are now looking for balance sheet strength from the institution, rather than relative performance. They just want their money back."

4. Asset allocation is coming back 

"Ten years ago, asset managers were responsible for asset allocation and then we had what I call the gap in asset allocation where it was taken away from us, and now it is coming back.. people think the multi-strategy is going to be one of the fastest-growing areas of the business."

5. However, as performance differentials widen, managers are focusing on particular asset classes which they're strong in

"The dispersion in performance of certain asset classes over the last few years has widened considerably. Five years ago, the dispersion on a credit mandate might have been 50 basis points; now it is about 500bps. That is a 20% difference in performance, which is staggering....That is why you are seeing this huge concentration in certain asset managers in certain asset classes. Someone will be good at emerging markets, someone will be good at European equities, and the money just floods into those jumbo funds."