Growing regulatory complexity is leading to more outsourcing in the fund management industry and a greater focus on innovation
Tue, 26 Mar, 18:00 (14 hours ago)
Over the next two years, 99% of fund managers believe it will become much harder to navigate regulatory complexities, and this will fuel greater levels of outsourcing and a stronger focus on innovation.
Carne Group commissioned research with fund managers in 10 countries that collectively manage $1.6 trillion. The study found that over the next 12 months, 41% expect to dramatically increase their use of third-party service providers including specialist fund management companies and a further 50% expect their use to increase slightly. Those surveyed identified the top three reasons for the increase in outsourcing being:
The difficulty in recruiting appropriate staff
The growing burden of regulation; and
Operating in more jurisdictions
When it comes to the level of outsourcing of the running of fund management companies to third parties, 79% of fund managers surveyed expect this to increase over the next three years. The study identified the main benefits in outsourcing being:
The ability to launch different product sets
Increasing speed to market; and
Being able to deliver stronger fiduciary management of funds.
When asked to identify the three main factors driving innovation in the industry, the fund managers surveyed selected:
Advances in technology
Increased use of alternative data; and
Greater insight into how alternative asset classes perform in different environments.
John Donohoe, Group CEO at Carne Group commented: “Many asset managers are struggling with the impact of the continually increasing regulatory burden, the costs to their businesses and the impact on investor returns. To address this, they are making greater use of third-party specialist providers, enabling them to speed up their time to revenue and to focus on what matters most… product innovation, delivering investment performance and raising assets.
Cost pressures and fee compression are leading to consolidation in the fund management industry. As this gathers pace, the winners will be those who find effective ways to navigate the changing environment. Successfully addressing this will also allow them to explore greater product innovation and differentiation, and faster speed to market.“
Access the full report here for more detailed insights or contact your relationship manager if you wish to delve deeper into the findings.
About the research
Carne Group commissioned research in December 2023 and January 2024, surveying 201 senior executives working for fund managers in the UK, Germany, Switzerland, Italy, France, the Netherlands, Norway, Finland, and Denmark with a total of $1.6 trillion in assets under management. The fund management sectors covered include hedge funds, private equity, real estate, infrastructure, private debt, equity, fixed income, and multi-asset classes.
Those interviewed included COOs, CFOs CROs, Heads of Product, Heads of Compliance, Heads of Legal and Senior Fund Managers.
About Carne Group
Founded in 2004, Carne Group is an international company and has established itself as an expert and pioneer in fund regulation and governance solutions, allowing it to become Europe’s leading third-party management company and trusted partner in the fund management industry.
Carne works with more than 650 clients - from boutique fund managers to global institutional investors - supporting funds distributed in over 160 countries and overseeing over $2 trillion in assets under management. Carne employs more than 700 employees worldwide.
This publication has been prepared for general guidance on matters of interest only and does not constitute professional advice. You should not act upon the information contained in this publication without obtaining specific professional advice.
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