Geopolitical risks preoccupy fund industry, says Bloomberg

19 April 2017   Category: News, Asia, Global   By Asia Asset Management

Geopolitical upheavals, global regulations and technological disruptions are the top concerns forcing the fund industry to rethink investing models and strategies, according to a report from Bloomberg.

The report was based on a survey of more than 400 industry practitioners it hosted at a forum in Singapore earlier this month.

Half of the respondents see geographical risks as the biggest challenge the fund industry will face over the next 12 months. Some 23% cite fees and withdrawal pressures from changing market structures or demand as their major concern, while 15% worry about regulatory pressures, including Basel III, the reform measures developed by the Basel Committee on Banking Supervision to strengthen regulation, supervision and risk management of the banking sector. 

The majority, or 47% of respondents say US President Donald Trump’s impact on trade and growth is their biggest preoccupation as an investor this year, followed by 38% who are concerned about changes in Europe’s political landscape, including Brexit negotiations and elections in key European countries.

In terms of geographical spread, the US was the top investment choice of respondents, with Southeast Asia and Europe in second and third spots, respectively.

The majority, or 43%, picked Asia equities as their most likely investment, followed by 26% for multi-assets, and 20% for US equities.

The survey also found that the majority of respondents believe that demand for lower fees drives the popularity of passive investment in Asia, and that active investment firms can counter this by demonstrating and building a better track record of outperformance against the index.

Technology continues to play an important role in the industry, with a majority predicting artificial intelligence has the most potential to impact the insurance industry in the next three to five years.