Active asset manager in cost trap

For quite some time, banks have to suffer under increasing costs from regulation. Those may now effect asset managers too, says a recently published study from Oliver Wyman and Morgan Stanley.

In their study “Wholesale Banks & Asset Managers”, the consultancy Oliver Wyman and investment bank Morgan Stanley identify an increasing cost pressure on asset managers. Stress tests, rules regarding liquidity and a focus on a balanced relationship of cost and performance are pressuring asset managers. Besides regulation, cost-effective ETFs are a source of competition for active managers. The study expects costs for active asset managers to increase by three percent within the upcoming years.

Passive products on the other hand are at an advantage. The study shows that ETFs will be increasingly used due to higher liquidity demands and an pressure to invest caused by the negative interest rate environment. Especially for highly liquid asset classes, the study assumes a high growth in the exchange traded products segment.