A Year-End Look at Investment Management

The end of the year is a time for assessment, and that's especially true in the world of investment management. Global asset managers have a long-delayed reckoning coming in 2023, with falling assets and rising cost pressure, regulatory changes and the politicisation of ESG all shaping the agenda. In this special year-end edition of FT Asset Management, let's take a look at some of the key developments and trends in the sector.

First, let's look at the performance of REITs. While 2022 was a difficult year for most real estate investment trusts (REITs), the worst-performing subindustry was mortgage REITs (mREITs). Annaly Capital Management (NYSE:NLY) is expected to deliver a year-over-year decline in earnings on lower revenues when it reports results for the quarter ending December 31st.

Then there's the issue of asset allocation. Senior asset management executives have a blind spot when it comes to understanding the impact of their decisions and the risk of their investment. First Republic investment Management Inc. increased the proportion of Lincoln Electric Holdings, Inc. (NASDAQ: LECO) that it owned by 30.2%, despite the company's recent stumbles.

The rise of cryptocurrencies is also having an impact on asset management. Samsung's asset management subsidiary in Hong Kong has launched a bitcoin futures exchange-traded fund (ETF). This is a major move by a major asset manager, and one that could have implications for the future of the sector.

Finally, let's not forget the human element. The writer is a former global head of asset allocation at a fund manager. She brings her insights to the table and helps to focus the conversation on the importance of human capital and the role of the individual asset manager.

It's been a turbulent year for asset management, but there is still cause for optimism. With the right strategies and investment, asset managers can still succeed in the long run.