As investors there is natural and strong preference to consolidate around accepted ‘norms’, or that which becomes a guideline for what is considered normal. And today we witness the arrival of the true mega-fund managers as fund groups rush headlong into wedlock.
Much like previous periods of mega-mergers in other industries, a key driver has been price collapse, excess supply and a need to cut costs. Unlike the ‘big oil’ mega-mergers of the 1980’s when the oil price was low and could recover with volumes, it is hard to see the trend to lower management fees abating. These new mega funds management companies are now beholden to maintaining funds under management, sales and market efforts, rising markets and reducing cost. There is also a belief that clients benefit from just a few strategic global relationships.
However, there is a key question that must be asked - can funds management be scaled to infinite scale and deliver for investors the very best investment results? Are the leaderships of these firms as focused on investment culture and supporting investment teams to excel than meet short term-performance, flows and costs? On the flip side, can a specialist investment firm starting out today ever hope to compete with the resources of monolithic institutional fund managers that make up the bulk of the money management industry?
We hope for investors long-term wealth creation and preservation that the answer is and continues to be a resounding yes.