Evolution and innovation will continue at a rapid pace, radically transforming institutional investment management by the time Pensions & Investments' 50th anniversary rolls around n 2023.
Predictions for changes a decade out range from wholesale abandonment of traditional asset allocation to a return to old-fashioned core-and-satellite portfolio construction with some very modern twists.
“In 10 years, investors will be much better at identifying risk and will be all-ocating risk rather than capital. The world will have woken up to the fact that the focus has to be on risk rather than asset allocation,” said Max Darnell, managing partner and chief investment officer of quantitative money manager First Quadrant LP, Pasadena, Calif.
“I think it will be a very, very different world,” a decade from now, he added.
Sources didn't shy from 10-year predictions.
“We're not talking about flying saucers ... the state of the investment industry a decade from now is visible today if you look very closely, talk to people and listen carefully,” said Terry Dennison, senior partner and U.S. director of consulting, based in Mercer's Los Angeles office.
Pensions & Investments used the occasion of its 40th anniversary to talk to a wide swath of industry sources, including both veterans and fresh-faced up-and-comers, about the future of institutional investment management.
“I'm very optimistic about the next 10 years,” said Simon Ruddick, CEO of alternative investment consultant Albourne Partners Ltd., London.
“There are smart, decent people on both sides of the industry that will come up with innovations and solutions. If you give institutional investors a chance to look at great investment deals, they will move toward them.”