Asset owners have cited regulation as a significant challenge following the introduction of Consumer Duty, according to the annual JPES Partners’ Asset Management Agenda research report.
The research surveyed 37 senior decision makers responsible for £2trn AUM across pension funds (DB and DC), fiduciary managers, wealth managers, platforms, and charities.
Of those surveyed, 78% flagged regulation, and in particular the impact of consumer duty and ESG regulation, as a key area of concern.
However, inflation and interest rates remained the biggest concerns, with 81% of respondents focused on those issues.
Consolidation was also highlighted as a major challenge, with over half of the respondents (54%) anticipating M&A to be an important driver of both managers and asset owners over the year ahead.
Significant allocation changes
In terms of allocation, the report found that asset owners are rethinking their investment strategies, particularly in relation to risk, with 48% of respondents indicating they intend to make ‘significant’ or ‘very significant’ changes.
Confidence towards managers has also improved – with 46% saying they are ‘confident’ or ‘very confident’ in their managers, compared to 33% in 2022.
However, there has also been an increase in those showing the lowest levels of confidence in their managers.
The report also found that demand for private markets assets has become “more nuanced”, with asset owners focusing on private credit and infrastructure amid less demand for private equity.
Other asset classes also receiving significant attention include active EM equities and fixed income, particularly investment grade products.
Meanwhile, environmental, social, and governmental factors were less of a priority than in previous years. However climate change remained the most pressing concern for asset owners among all ESG factors, followed by biodiversity and D&I.
Significant concerns remain over the communication of asset manager culture – 84% of respondents said this was an issue, particularly related to team quality, ownership structures and delivering value for money.