The funds management industry is in danger of consolidating into large firms focusing on marketing, the former CIO of Phillips & Drew, Tony Dye, warned recently in London.
The IPE Newsline reports that he said trustees had become fearful of underperformance or excessive risk and would lean towards using larger investment managers, which had the wherewithal to pay if sued.
“Firms will be less likely to take risks. They will use central lists of stocks to be chosen for portfolios and centrally imposed limits on sector divergences. There will be less need for individual fund managers and the real resources will be devoted to marketing, and the need to support these marketing efforts will lead to consolidation within the industry,” he said.
Anxious trustees are also likely to look upon indexed management or enhanced management more favourably as a guarantee against severe underperformance.
