There's a $3.4-trillion inflows opportunity in active asset management, and it's not in traditional or passive strategies.
That's the central thesis of a new white paper, "Life After Benchmarks: Retooling Active Asset Management," just released
by the team at Darien, Connecticut-based Casey Quirk
, management consultants to fundsters and other asset managers [see the full report
The 20-page report — authored by Casey Quirk partner Daniel Celeghin
, co-authored by senior manager Jonathan Doolan
, and contributed to by three other partners — makes the case for what Casey Quirk team calls "new active" strategies that eschew benchmarks in favor of performance and/or risk targets tailored to clients and that cross traditional asset class and alternatives barriers to create products. Casey Quirk predicts that $3.4 trillion will flow into these new active strategies over the next five years, compared to the $1 trillion that will flow into passive strategies and the $1.8 trillion that will flow out of traditional active ones.
"Legacy managers that refuse to change will, over time, see their business erode," Celeghin and Doolan write. "Embracing change, however, is easier said than done, as the risks involved in a botched retooling of the investment engine can be catastrophic. Therefore, asset managers should carefully consider the best mix of capability levers with which to retool their investment engines."
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