Edward Glyn, managing director, head of global markets at Calastone outlines how fund managers can embrace the current downturn and modernise key aspects of their operations in order to lay the foundation for the future.
Against a volatile economic backdrop, markets have begun 2023 in uncertain fashion: even a switch to healthy inflows in March only brought the net total for the first quarter narrowly into positive territory. It is clear that fund managers, while hoping for the best, must continue to prepare for the worst, working under the assumption that the bear market may have legs for some time to come.
That being the case, the question becomes how best they can cut their cloth. For some the first instinct will be to trade their way through the downturn. While no-one could deny the importance of smart asset allocation, this can only be one prong of an effective strategy to fight the bear.
The other is cost reduction. Unflashy and sometimes unheralded, this is also the purest source of alpha, in which every saving can contribute directly to outperformance. Smart fund managers recognise that it is not just what business they do, but how they organise and manage their business that makes the difference between success and failure…