Asset managers have been adapting to the realities of the modern world for some time now, but the coronavirus crisis has both exacerbated and accelerated this process. The spread of the pandemic has stress tested the resiliency of financial firms, whilst also intensifying pre-existing fundamental market challenges.
Squeezed markets, where non-fundamental shortterm factors influence prices, is one such challenge. Additionally, debate over passive versus active investment strategies continues to rage on, with little consensus on the best approach. On top of this, historically low interest rates have left many investors grappling for yield, while a torrent of new regulations and standards has demanded substantial resources from managers that want to be not just compliant, but also successful when judged against their peers.
Enter coronavirus, and suddenly the challenges move from significant to Herculean. The regulatory and governance pressure has only intensified, and already low rates have been slashed further still. A recession is looming, and markets worldwide are even more volatile than ever before.