PR Newswire | 4/26/2021
Because… According to Piper Sandler, the number of asset management transactions clocked in at 256 deals in 2020, a 5% decrease from 2019, but a continuation of the elevated level of annual deal activity of the past four years. There was an average of 250 transactions annually between 2017 and 2020, 72% higher than the average of the prior 4-year period. We have seen M&A activity remain strong in 2021. Since the beginning of the year, Hamilton Lane acquired 361 Capital. Brandywine Global lifted out a high-yield and corporate credit team from Diamond Hill. Touchstone took over select retail mutual fund assets from AIG. William Blair purchased Investment Counselors of Maryland (ICM). Wells Fargo Asset Management was sold to a couple of private equity firms. We believe favorable market conditions, increased industry competition, the quest for scale, and the pursuit of differentiation will continue to drive consolidation to a new level.
2) Liquid Alternatives: “Alternatives Should Be a Core Holding for Investors”
DailyAlts | 4/26/2021
Because… While Canada-based Mackenzie recommends that investors should consider having at least 10%-to-20% of their overall portfolio allocated to alternatives, we feel it would be hard for U.S. investors to take that advice. As of March 2021, HFRI Fund Weighted Composite Index, the best-performing HFRI composite index, returned 33.97% for one year and 7.64% for three years. By comparison, S&P 500 Index gained 56.35% and 16.78% for two respective periods. When traditional equity markets generate much higher returns, most retail investors would not sacrifice better performance and put money into alternatives. Another hurdle for investor adoption of alternatives is their lack of adequate knowledge. The majority of investors do not seem to comprehend the purpose of investing in alternative funds, what they are really getting into, and how they should react to changing market conditions. As a result, if alternative strategy funds produce lackluster performance, investors run away instead of sticking around for the long term.
3) ESG ETFs Continue to Pull in the Assets
etfexpress | 4/27/2021
Because… The article mentioned that ESG ETFs in both equities and bonds pulled in assets with iShares Sustainable UCITS EMEA ETF range crossing $50 billion and UBS Sustainable Development Bank Bonds UCITS ETF reaching $1 billion in assets. ESG investing is all the rage not only in Europe but also across the world. The latest Natixis survey of global institutional investors, professional fund selectors, and financial advisors reveals that 72% of institutional investors and 77% of the gatekeepers are implementing ESG strategies, up from 61% and 65%, respectively, in 2018. Meanwhile, research from Scientific Beta found that 75% of the outperformance of ESG strategies cited in popular academic studies on the subject was due to their exposure to the quality factor, which can be cheaply accessed through systematic funds. As ESG has become an integral part of the investment process, fund providers need to identify product strategies that stand out from the pack and bring their expense ratios down in the meantime.