Despite uncertainty about the possible effects of higher inflation and equity valuations after a strong year of asset growth and profitability, many money managers are optimistic about their prospects in 2022.
Other big themes for money managers in the new year — aside from deciding where their employees will be working during the ongoing COVID-19 pandemic and beyond — include inflows into alternative strategies; continued fee pressure on traditional managers; employee retention and recruitment in a competitive market, especially for people with diverse backgrounds; technology advancements; and expansion of ESG investment strategies.
Equity market returns were strong in the year ended Dec. 31 and contributed to manager growth with the S&P 500 index up 28.7% and the MSCI ACWI index up 19%, compared, respectively, to 18.4% and 16.9% as of the same date a year earlier.
In contrast, the Bloomberg U.S. Aggregate Bond index was down 1.5% in the year ended Dec. 31 in contrast to 7.5% in the prior year.
"The economic state of the money management industry in 2021 was as strong as I've ever seen it in terms of profitability. In aggregate, it was a fantastic environment for money management firms. Many managers, especially alternative firms, are going into 2022 on a very strong footing," said Kevin Quirk, a Stamford, Conn.-based principal at Casey Quirk, a practice of Deloitte Consulting LLP.
To varying degrees, industry observers and money managers said they expect 2022 to be another good year.