Investment opportunities in Asset Managers
Asset managers run a relatively knowledge-intensive business and therefore require specific competencies to digitalize their workflow. Furthermore, when introducing digitization into this particular sub-sector, the traditional service of providing investment advice goes through a mutation and the service becomes a product.
The digital opportunity offers interesting avenues for asset managers as they can now compete on a global stage. In particular, this applies to smaller operators. The digital opportunity provides the facility for every asset manager to be visible, and therefore, accessible on a worldwide basis. These developments will generate new competition for bigger institutions, which should see their market share start to fall over time.
Not only do smaller asset managers now have an increasing ability to export their products and services, but they also have the opportunity to take advantage and integrate the services of other online providers, which would allow them to complement their expertise in certain areas of their product portfolio.
| Company | Ticker | Country | Upside Potential | Sharpe (FY01) |
| Julius Baer | BAER | Switzerland | 10 % | 5.09 |
| Investment case: Up until now, Julius Baer has been busy with the integration of ML. In the past, it focused strongly on building lasting relationship with its clients, and thereby developed its management structure along these lines. While present company results are good and the overall prospects appear to be exciting, we believe that the implementation of a fully-fledged and digitalized asset management opportunity would be difficult for Baer to achieve. | ||||
| Company | Ticker | Country | Upside Potential | Sharpe (FY01) |
| Legg Mason | LM | USA | -5 % | 4.25 |
| Investment case: Legg Mason, Inc. is an asset management company, specializing in fixed-income vehicle operations. The barriers to enter the asset management market are not significantly high; however, it does take time and skill to gather the level of assets necessary to build scale. Legg Mason organizes itself through a network of eight core affiliates. Given the size of its undertakings it would make sense to digitalize more of its operations, especially as its client base is now heavily skewed towards institutional investors. | ||||
| Company | Ticker | Country | Upside Potential | Sharpe (FY01) |
| Partners Group | PGHN | Switzerland | 9 % | 4.57 |
| Investment case:Partners Group has recently published negative results; some soft-corrective measures were announced. Given the profitability issues, we believe that the company does not yet have the available resources to address digitalization in a major way. | ||||
| Company | Ticker | Country | Upside Potential | Sharpe (FY01) |
| BlackRock | BLK | USA | 16 % | 5.74 |
| Investment case: BlackRock provides investment management services primarily for institutional investors. Passive strategies, including index funds and ETFs, accounted for about 60% of BlackRock’s long-term AUM. Given this, further digitalization of its operations (internal and external) is less of an opportunity and more of a must, as institutional clients generate less than one third of BlackRock’s long-term base fees
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