The Latest Headlines From Across The Wealth & Asset Management Sector - December

2023-12-15 |  Prince Naruka & Natalija Reeves

Welcome to our latest newsletter, we'll be exploring the top headlines impacting the world of wealth and asset management. 

In this month's newsletter, we dive into the growth opportunities within the private markets, AI technology and geographic regions. We will also explore some recent corporate activity within the industry, and touch on the potential overhaul in the definition of "financial advice" from the FCA and treasury.

Here are our top stories…

AI Rising: can ChatGPT revolutionise investing?

Doug Clinton of US tech/growth asset manager Deepwater thinks the likes of ChatGPT, Bard and Anthropic’s Claude really could be game changers and mark a huge step forward from traditional machine learning models which have been around for some time. The chat-based models are a new game in town. If you can type, you’re in. Clinton started hitting the keyboard in July and has about 30 strategies on the go. He says about 70% of them are beating their comparable benchmarks. Clinton is not claiming game over for traditional stock picking at this point. The track record is obviously miniscule and most of the strategies are just paper portfolios. Clinton thinks it's still early days, although he has confidence on the approach, he would like to prove that AI can beat markets in the long term to support their investment strategy.

Why Jupiter’s CEO is putting Europe at the heart of next growth steps

Jupiter is focusing on expanding its institutional client base in Italy and Germany as it attempts to become less reliant on the UK market, said its chief executive, Matthew Beesley. ‘Institutional is a place where we’ve added a significant amount of resource, and we have a large amount of people purely dedicated to that business,’ he said. Beesley highlighted that institutional assets now make up 18% of the business but that it could ‘go a lot higher’. The growth in institutional and international assets under management, amounting to £1.7bn and £2bn, respectively, provided a rare share-price bump for Jupiter after its half-year results in July. However, inflows to these divisions were flat in the asset manager’s third-quarter trading update in October. The firm has also redefined how it looks at distribution and now refers to this unit as its ‘client group’. The client group is split into a dedicated unit focused on client relationships, with the other half focused on the ‘holistic client experience’, as Beesley describes it.

Private markets ‘uniquely placed’ to benefit from mega-forces, says BlackRock

Private markets are set to face macro headwinds in 2024 but remain well placed to benefit from ‘mega-force’ thematics trends. In his foreword to the report, Edwin Conway, BlackRock’s global head of equity private markets, said: ‘Despite the continuing uncertainty facing investors amid higher rates, inflation and volatility, at BlackRock we are identifying and embracing the big, structural changes that are reshaping our world: the mega forces. Conway said examples of this would include infrastructure’s role in the energy transition and areas of real estate buoyed by large-scale changes in demographics. BlackRock believes the global private debt market could be worth $3.5tn in AUM by the end of 2028, up from $1.6tn as of March 2023. BlackRock said private equity is also in a period of adjustment due to higher interest rates and uncertainty, but should continue to perform relatively well. In BlackRock’s view, income growth and yield are going to be increasingly important for real estate as the market faces turbulence, so resilient cashflow and rental pricing power will be key.

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FNZ makes 100 UK job cuts in another redundancy round

Platform software giant FNZ is cutting 240 jobs globally, including close to 100 jobs in the UK, as it makes another redundancy round, citing acquisition synergies as the reason for the layoffs. FNZ, which provides technology for major UK platforms like Abrdn, Quilter, and Aviva, employs around 6,000 people globally. The move follows previous redundancy rounds in the summer and at the end of 2022, totalling around 400 job cuts. FNZ, currently involved in significant re-platforming projects for Abrdn, Scottish Widows, and Nucleus, acknowledged migration complexities causing delays in implementation projects. The company's UK revenues for 2022 dropped from £254m to £225m, attributed in part to a decline in assets under administration. Despite challenges, FNZ secured new direct-to-consumer platform contracts with UK banks Virgin Money and Monzo in 2023, and it was valued at $20bn (£15.7bn) following a 2022 equity fundraise.

India: too big to ignore?

India has been in the spotlight this year. The International Monetary Fund has said the country is set to become the world’s third-largest economy behind the US and China by 2027. The Indian equity market has been the best-performing major stock market over the past three years, and emerging market funds with allocation to Indian bonds have been growing across 2023, with JP Morgan announcing the inclusion of India in its emerging market bond index from June 2024. Some challenges still remain to be addressed however, such as the ease of access to the Indian government bond market, currently only available via local settlements, the transition to renewable power for the country, and the lack of urban jobs to consistently support the latest population trends.

AssetCo in talks to buy Somerset Capital – and it could be a good fit

Martin Gilbert’s AssetCo is said to be in talks to absorb the funds of Somerset Capital Management, after the firm announced it would wind down last week. As an emerging markets boutique, Somerset could be a compatible buy for AssetCo. Speaking to Citywire Wealth Manager about River & Mercantile’s rebrand to River Global, chief executive Alex Hoctor-Duncan said that his firm was on the lookout for specialist regional fund managers, especially within emerging markets, to boost the business further. River Global houses the active equity businesses of AssetCo, including SVM Asset Management, Saracen Fund Managers and Revera Asset Management, and they also bought Indian specialist Ocean Dial Asset Management.

7IM snaps up financial planner Amicus Wealth from Quilter

7IM has acquired financial planning and advice business Amicus Wealth, for an undisclosed sum. The deal sees London-based Amicus Wealth add £1bn in assets under management (AUM) to 7IM, creating a total of £22bn in AUM. Amicus Wealth is an appointed representative of the Quilter advice network and will continue to operate as an independent company to 7IM, led by existing managing director and co-founder David Fry. 7IM will support the financial planner in back-office capabilities, as well as offer its intermediary platform and range of funds and models to the business. Dean Proctor, CEO of 7IM, said: ‘This acquisition helps 7IM take the next step in its strategic growth plans, which is centred around a combination of organic growth and M&A.’

FCA to relax advice-guidance boundary in landmark review

The FCA and Treasury are consulting on three proposals which would overhaul the definition of financial advice, opening the way for banks, insurers and other larger firms to recommend products without straying into advice. The FCA said this new form of ‘targeted support’ could allow an authorised firm to describe the different ways a consumer could access their pension. However, critics may argue that these changes could also allow banks, insurers and direct-to-consumer platforms the ability to sell their own products more easily, and thus deter people from seeking financial planners. The new form of simplified advice is a revival of this model, after the FCA dropped plans for a similar regime earlier this year, aimed at getting clients with £10,000 or less in cash investing following pushback from the industry over the commercial viability of the model. The FCA is currently running field trials to explore effective touchpoints for engaging consumers with their pensions.

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