Q: What is the biggest change you have seen in the industry since you joined?
The biggest change over the past two decades has been the increasing market share of passive investment funds. Aside from the obvious headline of reducing costs, passives have had a profound impact on the way that we allocate capital. Most notably, they have provided broad access to market beta and in doing so have shone a light on the scarcity of alpha generation within the active management space.
A fund manager with a growth philosophy can no longer justify their worth by beating the broader market, they need to demonstrate sustained outperformance relative to the growth sector, or more specifically the ETF that tracks it. This shift has enabled asset allocators to better hold active managers to account while also providing easy and relatively inexpensive access to niche sectors that can be used to express a particular market view.
Q: What is the investment topic most brought up by clients/investors?
There are always questions in relation to the current state of the economy. Recently this might include the pathway for inflation, when the Bank of England is likely to cut interest rates or what the UK and US elections might mean for their investments. Fundamentally though, investors are most concerned about meeting their primary objectives.
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Our regular client reviews will inevitably address the market and economic outlook, which can be topical and intellectually engaging, but these meetings are a key opportunity for clients to fully assess their current financial position and to check in on how it compares with the plan we have put in place.
‘Financial wellbeing’ is a term we’re increasingly hearing from clients. Arbuthnot Latham’s wider team recently launched an inaugural survey to lift the lid on the main financial concerns of UK residents with investible assets of at least £100,000. Interestingly, 87% of people surveyed worry about the health of the economy, while 81% reported feeling regularly stressed or worried about their finances, proving that financial security doesn’t always equate to financial wellbeing.
This article originally appeared in the May issue of Portfolio Adviser magazine
