13 Top-of-Mind Trends for Investment Managers

These trends describe the environment in which today’s professionals operate, according to the CFA Institute

What’s on the minds of investment professionals as they look into the near future?

In a recent survey, CFA Institute identified a baker’s dozen trends that may influence investment management practice over the next three years.

Today, investments professionals operate within a tighter framework of increased financial market regulation scrutiny. Consider the risk alert just released by the Securities and Exchange Commission on advisor violation of advertising rules, or the SEC's ongoing crackdown on share classes with 12b-1 fees.

In addition, advanced analytics are altering financial analysis and decision-making processes, forcing them to understand machine learning and the implications of “big data.” Is it time to take stock of where you are as a firm with your technology? Any shout-outs for Google Analytics?

Add to that investment professionals’ continuing struggle to fully incorporate the low, or negative, interest rate environment into the portfolio management process. In August, Federal Reserve Bank of St. Louis President James Bullard said interest-rate policy should be left on hold.

The institute said that including the perspective gained from these and other trends in its practice analysis process better positioned its Chartered Financial Analyst credentialing program to remain relevant for investment professionals.

Following are the 13 trends for the next three years as they ranked in impact for 3,462 investment professionals polled by CFA Institute:

Importance of Financial Market History to Portfolio Management

13. Importance of Financial Market History to Portfolio Management

Significant impact: 13%

Moderate impact: 33%

Slight impact: 43%

No impact: 11%

ESG Integration into the Investment Decision-Making Process

12. ESG Integration into the Investment Decision-Making Process

Significant impact: 16%

Moderate impact: 39%

Slight impact: 38%

No impact: 8%

Greater Demand for Active Investment Management

11. Greater Demand for Active Investment Management

Significant impact: 18%

Moderate impact: 38%

Slight impact: 33%

No impact: 11%

‘Smart Beta’ Investment Strategies 

10. ‘Smart Beta’ Investment Strategies

Significant impact: 18%

Moderate impact: 45%

Slight impact: 32%

No impact: 5%

Importance of Investment Managers Possessing Soft Skills

9. Importance of Investment Managers Possessing Soft Skills

Significant impact: 26%

Moderate impact: 38%

Slight impact: 29%

No impact: 7%

Importance of Investment Managers Possessing Fintech Skills

8. Importance of Investment Managers Possessing Fintech Skills

Significant impact: 28%

Moderate impact: 40%

Slight impact: 27%

No impact: 6%

Risk Factor Asset Allocation Approaches

7. Risk Factor Asset Allocation Approaches

Significant impact: 28%

Moderate impact: 47%

Slight impact: 23%

No impact: 2%

Increased Global Demand for Alternative Investments 

6. Increased Global Demand for Alternative Investments

Significant impact: 28%

Moderate impact: 44%

Slight impact: 25%

No impact: 3%

Use of Robo-Advisors in Private Wealth Management

5. Use of Robo-Advisors in Private Wealth Management

Significant impact: 31%

Moderate impact: 36%

Slight impact: 28%

No impact: 5%

Pension Funding Shortfall on Capital Markets

4. Pension Funding Shortfall on Capital Markets

Significant impact: 33%

Moderate impact: 43%

Slight impact: 21%

No impact: 3%

Low/Negative Interest Rates

3. Low/Negative Interest Rates

Significant impact: 42%

Moderate impact: 37%

Slight impact: 18%

No impact: 3%

Role of ‘Big Data’ in Financial Analysis

2. Role of ‘Big Data’ in Financial Analysis

Significant impact: 43%

Moderate impact: 38%

Slight impact: 17%

No impact: 2%

Impact of Regulation on Investment Decision Making

1. Impact of Regulation on Investment Decision Making

Significant impact: 46%

Moderate impact: 39%

Slight impact: 15%

No impact: 1%

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