Beat the market, a challenge for so-called "active" managers

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Schroders focuses on investing in unlisted assets and wealth management to meet investor expectations.

Active managers now divide into two groups. Those who do not want to miss the train of passive management and those who prefer to assert their difference. The first group has grown considerably in recent months. Some preferred acquisitions like Aberdeen Standard Investment or Legal & General Investment Management (LGIM). Others have inaugurated their own lineup like JPMorgan AM, Candriam, Franklin Templeton or Fidelity International.

But among the great traditional managers, some like Schroders, still rely on active management. The reasoning ? "With the exception of emerging markets, all equity markets will deliver lower returns in the next 10 years than in the last 10 years", explains Charles Prideaux, Global Head of Products and Solutions. Schroders predicts that between the periods 2007-2017 and 2018-2027, the annual return on equity markets will fall from 8.5% to 5.8% in the United States, from 4.1% to 3.8% in the United States. euro, from 3.5% to 3% in Japan, but from 4.5% to 9.5% in emerging countries.

Unrealistic expectations

The problem is that investors have much higher expectations. A home survey of 22,000 investors in 30 countries shows that more than 70% of European investors expect annual returns above 5% over the next five years. In detail, 37% expect yields between 5 and 9%, 26% expect between 10 and 20% and 8% rely on performance above 20%.

This gap between end-investors 'expectations and economists' forecasts "Implies that in the future, we will need even more active managers capable of generating alpha, in other words to beat the market".

Unlisted assets and wealth management

The British management company created in 1804 put in particular on the unlisted assets to obtain this yield likely to satisfy the investors. After Adveq in 2017 in private equity, Schroders acquired Algonquin Management Partners, a European hotel management company last spring. Another engine of growth for society: wealth management. It reached an agreement with Lloyds Banking group last month. The plan calls for the creation of a wealth management joint venture and the transfer to Schroders of a £ 80 billion mandate previously held by Standard Life Aberdeen.

Sophie Rolland