Investment Management

Investment Management Global Market Outlook:

MARKET OVERVIEW

Global Capacity: 123.65 Trillion (2022)

Global Demand: USD 88.3 Trillion (2022)*

Global Demand CAGR: ~7.4 percent
(2022-2025)

• The Investment Management Industry saw a decline at an average rate of around 25 percent due to the COVID-19 Pandemic, the economic slowdown, and falling equity markets. It is expected to recover at an average rate of 12 percent till 2026.

• North America is the largest and most mature market globally. Emerging markets include Western Europe and Asia Pacific with strong retail segments

• Equity & Fixed Income were the major asset classes followed by alternative investments like hedge funds, fund-of-funds, commodities, real estate, etc. The uncertainty in returns from the Equity markets will force Investment Managers to opt for Fixed Income Securities

• The market is expected to witness an increase in the use of Artificial Intelligence (AI), Data Analytics Process Automation, and Outsourcing for efficient decision-making and increased customer satisfaction

Market Overview: Global Investment Management Industry

The investment management industry is expected to recover from the Covid-19 decline at a rate of 10 percent till 2026. Firms will continue to invest in digital transformation with new technologies that will improve client experience and operational efficiencies. Leadership can enable to drive the changes with effective communication across departments. This will in turn lead to higher chances of success at many levels.

• North America is the largest and most mature market globally

• Emerging markets include Western Europe and Asia Pacific with strong retail segments

• Equity and fixed income were the major asset classes followed by alternative investments like hedge funds, fund-of-funds, commodities, real estate, etc.

• The uncertainty in returns from the equity markets will force investment managers to opt for fixed-income securities

• The market is expected to witness an increase in the use of artificial intelligence (AI) and process automation for efficient decision-making and increased customer satisfaction

• The investment management industry declined at the rate of 25 percent due to the COVID-19 Pandemic, the economic slowdown, and falling equity markets and is expected to recover at a rate of 10 percent till 2026

Key Technology and Market Trends on Investment Management

Use of Advanced Technologies

• Investment management companies are using artificial intelligence (machine learning, natural language processing) for portfolio optimization, risk and compliance, data analysis, and process automation

• Companies are not only using technology to save costs but also to make the business model flexible and adaptable enough to the current and future uncertainties

• Use of blockchain in investment management is the latest trend in investment management to reduce costs related to intermediaries and improve security-related aspects of transactions

Automating More than just the Basic Business Processes

• Investment management companies are introducing Robo-advisory services for investment advisory, chatbots for better customer service, and algorithmic trading is adopted by top global players that automate the trading process through a set of rules, thereby reducing the number of people required to carry out the trading process

Outsourcing more than just Back Office Operations

• Top global players are outsourcing middle-office functions like data management, asset servicing, transaction processing, etc., and back-office functions like IT services and IT infrastructure to financial services firms or traditional BPO service providers in order to focus on their core competencies

• However, financial services firms are preferred by companies due to their wide experience and service capabilities