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ANNUAL SURVEY: 2017 Through our industry’s eyes
The Augentius Annual Survey is fast becoming an industry 'tradition' with more Managers from the Americas, Europe and Asia, providing input than ever before. For the first time we have also included Investors in the survey, providing interesting feedback on what they really think. With more than 200 respondents from around the world, our survey gives a solid indication of the key trends and predictions for the year ahead.
The Market Overall
In last year’s survey, 40% of the respondents suggested that 2016 was going to be better than 2015 – and they were exactly right! In our 2017 survey exactly 40% of the respondents reported they had a better year. But this wasn’t a global feeling. Managers from the Americas and EMEA felt that 2016 was either better, or as good as, 2015, whilst over 50% of Asian managers didn’t have such a good year.
Similarly, there are some diverse views on 2017. Asian managers have concerns regarding the effect on fund raising that Brexit and the other European elections taking place in 2017 may have. Others expressed the feeling that the election of Donald Trump may result in a more inward-looking US, making fundraising and investment harder for Asian managers. These views were not, however, reflected by Managers from the
Americas and EMEA where neither Brexit, the US elections nor the forthcoming European elections are perceived to have any major effect on investment strategy or opportunities.
Indeed more than 60% of Managers from the Americas believe that 2017 will be better than 2016. There is a view that the election of Donald Trump may reduce the level of regulation and create new investment opportunities for investment – both in smaller companies and infrastructure. The political changes of 2016 and 2017 also seem to have had little effect on Investor thinking, although some are anticipating an increased investment into US funds and others are more wary of “pan-European” funds given the political changes that have occurred.
Challenges & Frustrations
Managers the world over were substantially challenged by market regulation in 2015. This has continued to be the case in 2016 and remains a major concern for 2017. Both Managers in the Americas, and to a slightly lesser extent, Asia, were also challenged by fundraising during the year and again this is considered to be a concern for 2017.
Investment opportunities were considered to be of major concern in last year’s survey and they remain a real concern, across all regions, for 2017. We have seen the M&A markets slow down in 2016 and there is obviously concern that this trend will continue in 2017.
Investors have anxieties about the number of good investment opportunities available to them. This was an issue last year and not much has changed for 2017. Their second largest concern for 2017 is “Valuation Issues” – this is a new and emerging issue (26% recording it as a concern in 2016 growing to 46% in 2017) and one that Managers need to pay attention to.
And the frustrations?
We asked the Investors what their biggest issues are in the day to day administration of their portfolios and both “Late Reporting” and “Lack of Transparency around Fees” came out as the biggest concerns, closely followed by “Insufficient Detail”.
There are some genuine worries here, but when the Management community was asked about its concerns for 2017, “Investor Communications” came out at the bottom of the heap (the same in 2016). There is obviously a mis-match here. Investors have some real needs and wants and Managers must continue to develop their reporting and relationships with their Investors if they are to continue to attract new investment.
Over 50% of all Managers in EMEA and the Americas spent more on technology last year (as forecast in our 2016 survey) than in the previous year and 60% expect to spend more in 2017. This is in contrast with Asian Managers – 50% spent more in 2016 but only 30% expect to invest further during 2017. Investors are also investing in their infrastructure with nearly 50% of respondents spending more on technology in 2016 over 2015, and 60% expecting to spend even more on technology in 2017.
Good news all round for the technology providers!
Outsourcing & administration
The trend for Managers to outsource across a wide range of disciplines continues, including legal, taxation, regulatory reporting, fund administration and compliance.
On average over 40% of respondents outsourced work during 2016 (31% forecast in last year’s survey) and this trend is likely to continue throughout 2017. Asia is the exception, where only 22% of managers anticipate outsourcing work in 2017. Fund administration continues to be the most popular outsourced function.
Whilst fund administrators deliver reports and accounts no faster than the Managers themselves (according to the Investors) more than 60% of respondents value the oversight provided by a third party administrator and 65% feel that administrators give good value for their services.
In essence, the fund administration industry seems to be delivering what the investors are looking for.
Despite the political change that has happened in 2016, and will happen in 2017, most managers are confident that it will be “business as usual.” Is our industry so immune from political change?
Changing legislation continues to be a major concern for all – and of course, there is undoubtedly more change on the horizon. The industry will need to adapt further to accommodate whatever it may be faced with.
Finally – our industry continues to modernize – whether it be through specialist third party providers or other solutions. Given the need for transparency and detail, as demanded by Investors, this process will only continue to gather pace.