Panel, Conference Presentation
The Future of Asset Management | Global Conference
Milken InstituteRichard Ditizio, Raphael Arndt, Mike Gitlin, Matthew Harris, Bill Huffman, Jean Hynes
- Geopolitical fracturing and a multi-polar world prioritizing national security are expected to persist, causing traditional equity-bond correlations to break down as the industry exits the post-WWII regime.
- The investment landscape is projected to shift from 90% passive/10% active to 60% passive/40% active over the next 10 to 20 years, alongside a predicted decline in U.S. stock market dominance from its current 70% share as markets broaden.
- Energy transition initiatives are forecast to evolve into a distinct asset class within 10 years, accompanied by a proliferation of public-private partnerships needed to fund digitization, grid refurbishment, and address high government debt levels.
- Advances in biology and medicine, such as GLP-1 treatments, are anticipated to dramatically lower morbidity and mortality over the next 20 years, extending life expectancies to 90 or 100 years and bending the healthcare cost curve.
- Artificial intelligence is expected to drive a massive productivity boom and become game-changing, with one entity planning to experiment with an AI agent joining the investment committee within the next month.
- Market expansion and dispersion are projected to create opportunities for active managers over the coming year, with 10 years seeing a shift away from rigid classifications between public and private credit.
- Regional outperformance is forecast for Europe due to fiscal spending addressing geopolitical tensions, Japan due to inflation and a risk-embracing new generation, and Australia due to reduced competition, while the U.S. market share is expected to decline.
- Private asset complexity and risk understanding will present real challenges for clients and staff over the next two to four years, a period that also coincides with significant trends in annuities moving to target date funds and the DC/401(k) market.
- Fee compression is expected to make efficiency and scale critical for delivering returns, prompting firms to restructure into smaller groups to prevent idea loss as assets grow toward 2031.
- A democratization of alternatives, particularly infrastructure, is expected to make these assets available to a much wider investor audience.
- If U.S. government funding for basic research retreats, contributions may shift to other governments, universities, and the private sector, while regulatory changes may increasingly complicate confidence for global investors regarding decision-making.
- Employees are advised to invest in their own careers as significant changes occur over the next decade, with the public-to-private investment landscape expected to see a globalization of business bringing credit and equity to clients.