The respondents, an assortment of fund groups with substantial European operations, overwhelmingly believe that major headwinds, such as Brexit, increased regulation and the ongoing threat from passives, will hamper the industry’s profitability in the near-term.
If you can’t beat them, join them
More than two thirds of the group admitted they would probably be pushed to launch their own passive products and 54% said the success of the passives industry would mean less assets under management for active managers.
All participants agreed there would be some kind of impact from increased competition from passive alternatives, with adjusting fees down on mainstream funds considered the most likely outcome (77%).
Of the regulatory headwinds, Brexit was deemed the biggest threat to the fund management industry, followed by MiFID II.
The vast majority of respondents said the UK’s separation from the EU would have a negative impact on the industry, while 15% said they expected Brexit to be “deeply damaging”.
And 54% of those polled judged Brexit and the introduction of the MiFID II framework next January would negatively impact the asset management sector.