4 External Asset Manager Trends That Will Reshape the Industry in 2023

How External Asset Managers Are Shaping the Future of Investing

External asset managers (EAMs) are playing an increasingly important role in the investment landscape. As institutional investors and high-net-worth individuals seek to diversify their portfolios and enhance returns, they are turning to EAMs for their expertise and access to a broader range of investment opportunities.

1. The Rise of Outsourced CIOs

One of the most significant trends in the EAM industry is the rise of outsourced CIOs (OCIOs). OCIOs provide investment management services on a discretionary basis, allowing investors to delegate the day-to-day management of their portfolios to a professional. This trend is being driven by the increasing complexity of investment markets and the need for investors to focus on their core competencies.

2. The Growth of Alternative Investments

Alternative investments, such as private equity, hedge funds, and real estate, are becoming increasingly popular among EAMs. These investments offer the potential for higher returns than traditional asset classes, but they also come with higher risks. EAMs are able to provide investors with access to these investments and manage the associated risks.

3. The Use of Technology

Technology is playing a transformative role in the EAM industry. EAMs are using technology to improve their investment decision-making, automate processes, and better serve their clients. This trend is likely to continue in the years to come as EAMs seek to gain a competitive advantage.

4. The Focus on ESG Investing

Environmental, social, and governance (ESG) investing is becoming increasingly important for EAMs. Investors are increasingly seeking to align their investments with their values, and EAMs are responding by offering more ESG-focused investment products. This trend is likely to continue as investors become more aware of the importance of ESG factors.

Why External Asset Managers Matter

External asset managers matter for a number of reasons. First, they provide investors with access to a broader range of investment opportunities. Second, they offer professional investment management expertise. Third, they can help investors manage risk.

Benefits of Using an External Asset Manager

There are a number of benefits to using an external asset manager, including:

• Access to a broader range of investment opportunities: EAMs have access to a wider range of investment opportunities than individual investors. This is because they have relationships with investment banks, private equity firms, and other investment providers.
• Professional investment management expertise: EAMs have the experience and expertise to make sound investment decisions. They have a deep understanding of the financial markets and are constantly monitoring economic and market trends.
• Risk management: EAMs can help investors manage risk by diversifying their portfolios and using hedging strategies. This helps to protect investors from downturns in the market.

How to Choose an External Asset Manager

When choosing an external asset manager, it is important to consider a number of factors, including:

• Investment philosophy: What is the investment philosophy of the EAM? Do they align with your investment goals?
• Fees: How much does the EAM charge for its services? Are the fees reasonable?
• Performance: What is the track record of the EAM? Have they consistently outperformed the market?
• Experience: How much experience does the EAM have? Do they have a team of experienced investment professionals?
• Reputation: What is the reputation of the EAM? Have they been involved in any scandals or controversies?

Conclusion

External asset managers are playing an increasingly important role in the investment landscape. They provide investors with access to a broader range of investment opportunities, professional investment management expertise, and risk management services. When choosing an EAM, it is important to consider a number of factors, including their investment philosophy, fees, performance, experience, and reputation.

Tables

Table 1: Assets Under Management of External Asset Managers

Table 2: Top External Asset Managers by Assets Under Management

Table 3: Investment Strategies Offered by External Asset Managers

Table 4: Fees Charged by External Asset Managers