Five major trends in the development of the global asset management industry

In 2016, the global market fluctuated, black swan incidents occurred frequently, global asset management overall innovation was dull, some original trends further developed, passive assets such as ETF continued to be strong, global asset scale exceeded the active management of hedge funds; large asset management The company's rate for passive products is further reduced; the impact of technology-driven changes on the asset management industry continues to change, smart beta products and robots 300024, and the most cutting-edge artificial intelligence are changing and reshaping the asset management industry. .

First, passive products are still the strongest

The ETF continued to grow rapidly in 2016. As of the end of November, the global ETF assets have reached 3.445 trillion US dollars, and the net inflow of funds has exceeded $ 59 billion. The ETF in the US market has reached $2.5 trillion, and the trend of being the darling of investors will continue in 2017. Especially in the recent stage, the development of ETFs is even stronger. Since November, the market sentiment represented by the United States has changed, funds have been divested, and most of the funds have been selected by ETFs rather than traditional mutual funds. Changes in regulatory policies will also make ETFs' low-cost structure more than mutual funds. more popular. The Smart Beta ETF will continue to be the fastest growing emerging product in the ETF. More than $45 billion has flowed into the Smart Beta ETF this year, surpassing the $30 billion last year, and the fund giant BlackRock has $20 billion.

However, with the increase in the issuance of ETF products, competition has become more intense. In the US market, 223 new ETFs have been issued in 2016, but only 11 of them have exceeded the threshold of $10 million, and most ETFs have existing themes rather than innovative products.

In this context, asset management companies are more optimistic about the development of bond ETFs in 2017. JP Morgan announced that it will launch at least six bond ETFs in 2017. ETF.COM analyst Matt Hougan said that fixed-income ETFs may be the fastest growing ETF market in the next three years. Smart Beta ETF is also evolving from the stock sector to the fixed income sector. Currently, only 24 of the 783 smart beta products on the US market are in the fixed income sector. In other markets, the product range of the ETF market is also expanding rapidly. For example, the Hong Kong market also introduced leverage and reverse ETF for the first time in 2016, which is in line with the US market.

Second, the trend of reducing management fees continues

The trend to reduce management rates has continued in 2016. In the case of piloting, in December, the company announced that it would reduce the management fees for its 35 products. This price war led Fidelity, BlackRock, Charles Schwab and other companies to follow suit. In 2016, all of the above-mentioned large asset management companies had reduced prices. Pilot CEO Bill McNabb said that although some people think that piloting lower rates is launching another wave of price wars, the company believes that it is a normal business operation.

Over the past 10 years, large fund companies have been lowering rates in an attempt to attract investors, and this trend will continue in the future. Reducing management rates is not only for mutual funds and ETFs, but also for index and active management as well as stocks and bonds, domestic and international market products.

In addition to the local market, large multinational giants continue this trend to the global market. In the Hong Kong market, following the BMO Asset Management Company, the pilot also reduced the rates of its five ETF products to varying degrees. Although Asian investors are not in the first place in terms of investment costs compared to developed markets, the actions of multinational giants will further reduce industry management fees.

Third, hedge funds continue to be weak and difficult to break

In 2016, hedge funds still failed to get out of the embarrassment. Although the total assets under management of global hedge funds have remained above $3 trillion, the funds flowing into hedge funds have experienced negative values ​​for the first time since 2009, and are also recorded for the third annual net outflow, with passive products. The pursuit of the formation is in stark contrast, the asset size has been overtaken by the ETF.

In November, investors redeemed $2.2 billion from hedge funds, bringing annual outflows to $83.1 billion. Among them, large hedge funds suffered a lot of redemption, and it is difficult to reverse this situation in December. In the trend of the first recovery of cyclical assets led by Trump's election, hedge funds did not score a slice.

In terms of performance, as of mid-December, the performance of the world's top 100 hedge funds is still weaker than the market's 60 basis points. But overall, in the first three quarters of this year, the global hedge fund's overall performance was 5.4%. In the context of net redemption of funds, due to the overall increase in performance, the management assets of hedge funds increased by 3% to 3.2 trillion US dollars.

Market analysis believes that on the one hand, this year's global market turmoil, hedge fund investment performance is not stable, plus the weak performance of previous years has not been continuously favored by funds; on the other hand, the high management costs of hedge funds have made many investors prefer Choose alternatives that are robust and cheaper. However, if hedge funds are able to maintain stable performance in an uncertain market environment, there may be a reversal of capital inflows in 2017.

Fourth, the robot investment is in the ascendant

Robot investment has continued to develop in 2016, and three types of robot investment have been basically developed: the earliest companies such as Betterment use calculations to recommend asset management portfolios; the combination of personal investment advice and machine algorithms Apply more complex algorithms to create active management combinations. According to BI wisdom, by 2020, the asset management scale of robot investment will reach 8 trillion US dollars.

The background of robotic investment has been sought after, including the popularity of passive investment, the familiarity and dependence of new generation investors on the network. In 2016, the robot investment platform of major mainstream fund companies continued to develop. BlackRock's future investment platform and pilot personal investment services have their own characteristics. They have achieved a healthy expansion based on their platform foundation and customer resources.

In recent years, robots have been in the forefront of developed markets such as the United States, but the need for face-to-face personalized services for high-net-worth customers is difficult to meet, and more and more companies are beginning to combine personal investment with machine algorithms. Focusing on this market demand, Charles Schwab has introduced a new model that combines online smart investment and offline financial management, and plans to officially launch in 2017. The “smart combination” of Schwab's platform will select up to 20 ETF products and offer a personalized portfolio for investors. The portfolio will also be automatically rebalanced based on the investor's investment objectives, and can also be combined with offline personal advice.

5. Artificial intelligence infiltrates into the asset management industry

The world's largest hedge fund company, the artificial intelligence team consisting of Dario's bridge water fund has begun to operate, project leader Ferrucci in 2013 before joining the bridge water fund for the IBM artificial intelligence system Watson development leader.

At present, the Bridge Water Fund has begun to research and apply the "Future Book" software automation management, so that the company's management becomes as systematic as the company's investment process. The ultimate goal is that the Bridge Water Fund will still function normally after leaving Dario, leaving the hedge fund to leave the “man rule” and let the machine learn the rational level of management. Although there are no large companies that have completely handed over the investment management process to artificial intelligence, the Bridge Water Fund has taken the first step in corporate management.

Compared with the intelligent management of the company's management, there are also other hedge funds or startups that are trying to launch artificial intelligence on investment. For example, Emma AI makes it possible to incorporate more complex factors into the market trend by applying artificial intelligence to a complex network system. Hong Kong's Aidyia AI system analyzes macroeconomic indices and corporate financial reports to make optimal trading judgments; Two Sigma uses natural language processing techniques to analyze issues in Fed's meeting on interest rates to facilitate trader modeling; Renaissance April Investing in Numerai, which uses machine learning techniques to predict stock market movements after obtaining a large amount of data and financial analysis reports.

Although the current ability of artificial intelligence in investment is relatively primitive, it is a step forward in quantitative trading and data processing. It is still unable to make independent and effective investment decisions by means of the system, but this has become the future trend of investment management. one.

(Editor: Liu Suyuan HN091)