Revitalizing Active Management

The number of headlines heralding the death of active management is overblown. It is old news that flows are going into passive, and that relentless fee pressures are crimping margins across the entire industry, but we believe there is hope for active managers.

While Strategy 101 dictates not to focus on shrinking markets with compressing margins, many active managers don’t have a choice; either they can capture a larger share of a shrinking pie, or they can slowly bleed assets and revenue until there is nothing left.

Some will invariably succumb to this fate, hoping that the good old days will return. Others will embark on ambitious cost-cutting or operational improvement campaigns. Still others will double down on new products, seeking the mystical “magic bullet” that quickly garners new flows at attractive margins.

Delivering sustainable alpha in active management

These strategies will certainly help in delaying the inevitable, and any asset manager serious about its own survival needs to be pursuing all of these, but none addresses the most fundamental issue of all: the need to deliver sustainable alpha.

At the end of the day, it is the ability to consistently generate alpha – the core competency of active management – that represents the most fundamental and sustainable competitive advantage. It is the path not just for surviving, but for thriving.

How to revitalize your active management

In this report, we offer suggestions for how asset managers can revitalize their active management business by reimagining those specific mechanisms that underpin sustainable alpha generation.

Not only is this the single greatest strategic opportunity for active managers, but it is also eminently possible. Importantly, however, it will require that active managers abandon a number of their traditional beliefs and biases, and be willing to disrupt the long-cossetted halls of portfolio management.

More information

For more on how to revitalize your active management, download the full report now.

Revitalizing Active Management