An interesting round-table discussion was posted on 12.10 in Pensions and Investments (The Journal of International Money Management) about the changing face of value of investment management firms. It highlights how despite the credit crunch, there is continued client demand for alternative investments (i.e. hedge funds) which is driving both the compensation of individual fund managers, and the search for asset management talent.
Particularly interesting is the comment on scale in fund management business:
We believe that there’s scale that happens in some specific
distribution channels. There’s scale that happens by having more assets
in a particular product strategy, which does work. And there are some
scale advantages particularly in retail on the operations, technology
and branding side. But it’s going to be scale within those silos rather
than an overall asset level that really drives benefit in the industry.
This resonates with what we are doing at Covestor. The world has changed and, as we continue to see from our members, talent is clearly not limited to the old institutions. Scale benefits are no longer to be found in piling money into one mega-fund that chases an index, but in the platform for all talented investors to exploit their individual strategies.