The asset management industry is coming back from the depths of the recession, but the largest asset growth area for money managers for the rest of the decade will be passive strategies and alternatives, John C. Siciliano, managing director at PricewaterhouseCoopers, told the audience attending the Global Indexing & ETFs conference in Scottsdale, Ariz., on Monday.
“We feel the industry will do well,” he said.
He said, overall for the rest of the decade, PwC predicts assets managed globally by third parties will increase to $72 trillion from $63 trillion. Passive strategies should triple to $21 trillion from $7 trillion, while alternatives will double to $13 trillion from $6.5 trillion.
Mr. Siciliano said there will be particularly large growth in Asia, South America and the Middle East. He said firms with a worldwide presence will be in the best position to garner those assets. He added the days are gone where a U.S.-based money manager can send one or two of its officials to Asia to open an office and offer U.S.-centric products and expect to be successful. Instead, he said there is an increasing demand for local and regional products in those markets and investment teams and sales personnel that are sensitive to the demands of those marketplaces.
Another discussion topic at the conference was whether Google, Amazon and other giant Internet technology companies might enter the money management world. The issue was debated at one panel. Robert D. Arnott, chairman and CEO of Research Affiliates, said he believes a company like Google will definitely enter the money management industry at some point, but how that will take shape is yet to be determined — whether Google acts as a distributor of investment funds or an aggregator of financial information or another scenario. “They are likely to be a force,” he said. Mr. Arnott made it clear he has not talked to Google officials.
Alex Matturri, CEO of S&P Dow Jones Indices, said he is not sure a company like Google would enter the money management industry in the role of an investor, given Google and other technology companies' concerns about regulation. He said it would be doubtful they would move into an industry that is becoming increasingly regulated.