Viewpoints: A Charles River Conversation
APAC Asset Owners: An Industry in Transition
Navigating Structural and Regulatory Change
Asset Owners including pension, superannuation and sovereign wealth funds face a number of operational challenges from cost pressures, increased regulation and a search for greater returns in a persistently low yield environment. Charles River convened a panel discussion to explore these challenges and the role technology vendors play in helping funds formulate effective solutions.
Evolving regulatory requirements and their interpretation for governance impact asset owners, increasing compliance costs and compelling funds to seek expertise interpreting and implementing these regulations.
CHALLENGING INVESTMENT ENVIRONMENT
The persistent low interest rate environment, increased volatility and aging populations are driving asset owners to diversify their investment strategies in order to retain assets and mitigate the impact of these trends.
INCREASED ADOPTION OF ESG AND ALTERNATIVES
APAC asset owners are increasingly shifting their portfolios to gain exposure to international and non-public markets, real assets and Environmental, Social and Governance (ESG)-driven investments. To support this shift, funds are actively seeking specialised expertise in managing these products and asset classes, and the ability to hedge associated FX exposures.
LEVERAGING GROWING DATA VOLUMES
The growing volume and diversity of data captured by asset owners can provide valuable investment insights for organisations with the expertise to extract that information.
“RIGHT SOURCING”: STRIKING A BALANCE
While significant aspects of operations may be outsourced, accountability for meeting regulatory obligations remains with the asset owner. Consequently, a fundamental re-think of fund operating models is occurring, with funds determining the optimal mix of outsourcing versus insourcing to suit their organisation.
Several factors impact the viability of running insurance, pension and sovereign wealth funds. These include increased competition, the current investment environment, member interest and regulatory and staffing costs. This is forcing smaller funds to consolidate and merge with peers in order to gain economies of scale.