European asset managers must adapt to new economics, says Fitch

GLOBAL - A Fitch Ratings report published today says European asset managers need to adapt products and staffing to new macroeconomic trends.

It suggests asset managers need to increase coverage in higher-growth regions, launch products deploying carry strategies and adapt investment processes to new capital market conditions.

Fitch believes the shift of power toward emerging markets, lower economic growth in the western world, increasing globalisation and the changing scope of banks will require European asset managers to think beyond their domestic boundaries, mainstream asset classes and traditional fund management practices.

Aymeric Poizot, head of EMEA at Fitch, said: "Fundamental changes that are affecting the global economy and capital markets are imposing adjustments to product development, culture, staffing and decision-making processes at asset managers."

In Fitch's view, asset managers that become more international in their organisation and staffing and develop a culture of change and innovation, with appropriate communication channels and decision-making processes, will be best-placed to improve their performance. 

The ratings agency said many asset managers would need to review risk and portfolio diversification assumptions, increase integration between risk management and portfolio management and create more holistic research capabilities through cross-asset research or political/geopolitical analysis.

In addition, managers must give greater consideration to behavioural and technical factors and provide more dynamic asset allocations.

The report details initiatives some managers have already taken, such as the launch of globally diversified products, the creation of a chief risk officer position or the development of theme-based asset allocation approaches.