Managers of outcome-oriented, active investment strategies — credit, unconstrained equity, hedge fund, private capital, real assets and multiasset-class solutions — can expect a $3.4 trillion windfall from institutional and individual investors globally by the end of 2018.
That new cash infusion will come at the expense of traditional active equity and fixed-income money managers, which are predicted by Casey, Quirk & Associates LLC to lose an aggregate $1.8 trillion during the period.
Passive managers can expect to bring in $989 billion as a group into traditional indexing strategies during this time.
The forecast is from a new report, “Life After Benchmarks: Retooling Active Asset Management,” provided to Pensions & Investments by the Darien, Conn.-based money management consultant. The conclusions are based on 120 interviews with industry executives, CQA survey data and asset-revenue growth projection modeling.
New active strategies, as CQA labeled the six investment categories, will appeal — strongly — to investors “whose appetite for risk ... is significantly increasing,” Daniel Celeghin, a Casey, Quirk & Associates partner and the report's co-author, said in an interview.
“Most existing active investment strategies are becoming obsolete. Investors' requirements and frameworks are moving away from rigid benchmark-based allocations towards risk-factor and outcome-based mandates,” the report said.