A core pillar for every asset manager is its fiduciary duty, due to their investors, to seek better risk-adjusted returns. Because of this, managers have always been under pressure to evolve with changing stakeholder expectations, adapt to market and regulatory changes, and transform their offerings and operations to stay current and relevant for their investors’ needs.
However, the exceptionally competitive environment we are currently in, combined with long-term low-interest rates and the rise of passives, has resulted in a trend of rapidly increasing allocations to private assets, such as private debt, private equity, and real assets.
Investors are increasingly viewing private assets as the norm, even in traditional public market-focused portfolios, and managers not considering this trend are missing out on not only potential assets under management growth, but also a real opportunity to generate alpha, and therefore profit to address shrinking margins.
But moving into this area presents a real challenge for managers. With the market already maturing, differentiated approaches are needed to stand out.
Managers shouldn’t underestimate the work required to transform operations and the technology and resources needed.
If you haven’t started already, it’s time to start making your plans now.
We have three key questions for managers to consider when creating a strong private assets proposition:
- Do you have a brand you can leverage to get a head start in a specific segment of private assets?
- Do you have any special relationships – or can you establish any – with underlying investments or other specialist managers that would give you access to ‘sought after’ assets?
- Do you have the skills needed across your distribution network to successfully deliver suitable products for your investors?
KPMG is the trusted advisor to many market leaders in the space. We have provided insights into pitfalls that others have fallen into and the decisions that should be considered early in the process to help organisations avoid unnecessary costs, making propositions and transformations a success.
There is a real risk that the rush to deploy capital may overlook some fundamental steps that need to be taken to ensure long-term success – none more so than governance. Robust controls need to be put in place that will guide a sound and responsible investment strategy and keep up to speed with an evolving regulatory landscape.
Our experience and extensive knowledge have been accumulated through working with the world’s largest wealth and asset managers on global projects across Consulting, Tax and Deal Advisory. We have the depth of expertise to help your organisation effectively plan your strategy for making the most of private asset opportunities.