The sun was shining on the 2006 Ryder Cup course Tuesday morning, when Ron Logue
delivered his keynote address to the international delegates of the NICSA
and Dublin Funds Industry Association
annual joint conference. Logue’s outlook was also bright, but guarded.
This year, the event was held outside Dublin for the first time, at The K Club in County Kildare – a center of world class golfing to match the world class financial services firms this island has attracted in recent years. As chairman and CEO of State Street
, the world’s largest institutional fund manager and the biggest fund administrator and custodian in Ireland, Logue was uniquely well positioned to offer perspective on top issues here. His cautionary words of wisdom: “We can’t sit back and create growth without somehow helping to manage it.”
Logue pointed to the growing retirement market across the developed world as “perhaps the biggest change in our industry … this is what creates opportunity in all segments of our industry, I believe, for years to come.”
Despite the asset growth associated with this trend, Logue sees a “global pension predicament” arising from a general unreadiness to face an aging demographic and all its implications.
As investors scramble to build a more secure future through tax-efficient vehicles that boost returns but reduce fixed costs, the mutual fund industry must innovate to maintain investor confidence, he said. Logue suggested that focusing on certain areas will maximize opportunity: collective investment vehicles and hedge funds; careful management transitions; and the relatively new approach of liability driven investments.
Looking at the financial services realm from the other side of the Atlantic, boutique-style firms and hedge funds loom larger. Logue’s comments reflected this: in front of an audience that included many representatives of Dublin’s thriving hedge fund community, Logue referred to hypotheses that hedge funds are a passing phenomenon, doomed to ever diminishing results as their number and popularity increases. “We at State Street do not [share that view],” he said.
“The EU has been one of the biggest growth stories, in recent years, of the fund industry,” Logue went on. New member states have brought new opportunities for asset managers, and a lot of growth has also coming from “traditional offshore vehicles,” he said. He also welcomed the rise of ETFs in Europe, where he said they are quickly catching up with the U.S. market.
His top tip for sustaining growth revealed a long-term, wide lens view. Logue cited Thomas Friedman’s 2005 book, The World is Flat
, in reminding listeners their recruiters will compete in a global job market. As one of State Street’s related initiatives, the firm has partnered with Microsoft
, Cisco Systems
and others in The European Alliance on Skills for Employability
, a technical training program aimed at boosting the skills of the unemployed and underemployed throughout the EU.
As time goes on, he predicted, fund companies will spend more on training, community programs and employee benefit programs in order to better recruit and retain workers.
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