More asset managers are turning to securities lending to boost performance, says BBH
09 December 2020 US
Image: Olivier Le Moal/adobe.stock.com
Increasing numbers of asset managers feeling the pinch of compressed fees are turning to securities lending as a way to top-up revenues, finds Brown Brothers Harriman (BBH) in its C-Suite asset manager survey.
BBH surveyed more than 50 senior executives collectively overseeing $18 trillion in assets under management (AUM) and more than 115,000 employees globally, as part of its first buy side market review.
The executives were interviewed on the unprecedented challenges this year, and how they are preparing for the future. According to BBH, the majority of asset managers agree that this is a transformative time for the industry marked by disruption—but also resilience, flexibility, and new opportunities.
The survey found that 35 percent of respondents said they are evaluating new strategies such as securities lending to expand their product suite and boost performance.
Many asset managers are using securities lending to boost performance, with 66 percent of asset managers already lending or are considering lending.
According to BBH, securities lending has become a tool for reducing the impact of fees on performance, protecting profit margins and improving fund returns and has become integrated into their fund investment strategies
Elsewhere, 61 percent of respondents stated the economy was their top concern. But, size has an impact. While 70 percent of managers with less than $50 billion AUM said the economy was their chief concern, larger institutions — those with more than $500 billion AUM — were more concerned with staff productivity and cybersecurity.
The survey also found that COVID-19 has dramatically influenced a variety of business considerations, with 75 percent of global asset managers stating that they are changing the way they allocate capital as a result of the crisis.
A further 77 percent indicated that their firms shifted seamlessly to remote work, while 23 percent said there were early challenges, but operations are now running smoothly.
Chris Remondi, BBH partner and global head of relationship management and capital markets, states that “2020 has disrupted our industry and every industry”.
“With this survey, we embarked on a mission: interview asset management leaders — CEOs, COOs, and senior executives — to see how managers are coping and what is the future of our industry,” he adds “The results of our conversations demonstrate both the challenges and the resilience of our industry.”
BBH surveyed more than 50 senior executives collectively overseeing $18 trillion in assets under management (AUM) and more than 115,000 employees globally, as part of its first buy side market review.
The executives were interviewed on the unprecedented challenges this year, and how they are preparing for the future. According to BBH, the majority of asset managers agree that this is a transformative time for the industry marked by disruption—but also resilience, flexibility, and new opportunities.
The survey found that 35 percent of respondents said they are evaluating new strategies such as securities lending to expand their product suite and boost performance.
Many asset managers are using securities lending to boost performance, with 66 percent of asset managers already lending or are considering lending.
According to BBH, securities lending has become a tool for reducing the impact of fees on performance, protecting profit margins and improving fund returns and has become integrated into their fund investment strategies
Elsewhere, 61 percent of respondents stated the economy was their top concern. But, size has an impact. While 70 percent of managers with less than $50 billion AUM said the economy was their chief concern, larger institutions — those with more than $500 billion AUM — were more concerned with staff productivity and cybersecurity.
The survey also found that COVID-19 has dramatically influenced a variety of business considerations, with 75 percent of global asset managers stating that they are changing the way they allocate capital as a result of the crisis.
A further 77 percent indicated that their firms shifted seamlessly to remote work, while 23 percent said there were early challenges, but operations are now running smoothly.
Chris Remondi, BBH partner and global head of relationship management and capital markets, states that “2020 has disrupted our industry and every industry”.
“With this survey, we embarked on a mission: interview asset management leaders — CEOs, COOs, and senior executives — to see how managers are coping and what is the future of our industry,” he adds “The results of our conversations demonstrate both the challenges and the resilience of our industry.”
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