What Will Differentiate the Asset Management Winners of Tomorrow?
From the rise of private markets to the proliferation of artificial intelligence (AI), the asset management landscape is changing quickly. How can managers stay relevant and competitive in the decade ahead? Martin Horne weighs in.
1. Possibly the most notable trend in asset management in recent years has been the rise of private assets. Can you talk about the interaction between public and private assets and the actions that asset managers need to be taking today to remain relevant in five or 10 years?
Horne: The growth in private assets in recent years is reshaping the industry to an extent. It’s driven an endless number of acquisitions in the asset management space, especially for managers playing catch-up, and has inspired many others to build their origination networks and develop new products, including for the wealth channel, to capitalize on this growth.
What I think is less of a focus, and perhaps this will change soon, is that private assets—like any assets—will go through cycles. Different strategies will go in and out of vogue and performance will vary over time. It’s very possible that parts of the private markets are overheated today and that may result in some pain—but that’s a healthy part of the natural evolution of capital markets.
What managers need to do today if they want to win in the future is not become overly reliant on any given product or strategy. At Barings, for instance, we’re increasingly viewing the world of credit as just that, credit—rather than drawing an artificial line of demarcation between public and private credit. The reality is that the lines are blurring between traditional public and private markets. Yes, there are still differences in things like documentation and issue sizes, but even those are converging to an extent. Importantly, the same underlying bottom-up, fundamental credit underwriting and analysis is needed whether you’re analyzing a broadly syndicated loan or a directly originated one.
Further to that...
