DALLAS — As the world braces for the first full year of the Trump administration, the global asset management industry is starting to see a lot of the same anxieties and challenges that it has faced for the past five years.
While some of those worries are starting to recede, the biggest challenges still lie ahead for asset managers.
The global asset-management industry has seen a major downturn in 2017, with the financial crisis hitting hard and companies such as Goldman Sachs and Morgan Stanley having to shed hundreds of thousands of jobs in 2017.
But the underlying trend is still there, according to Michael Pina, a senior investment analyst with the investment research firm Fitch Ratings.
“The world has seen an upsurge of wealth management companies in 2017 and 2018, and while we don’t know what that will look like in the next year or two, we are seeing the rise of new firms that are looking to invest and expand,” Pina said.
“The rise of the hedge fund is a big one, as is the growth in private equity and the return of large institutional investors to asset management.”
There are also a few things that could put a damper on the industry, though.
The Federal Reserve, which is trying to help the U.S. economy recover from the Great Recession, has been pressuring asset managers to get out of the way of the markets.
In January, the Fed said that it would not be issuing new money for asset management firms until 2018, as it looked for ways to boost the economy and reduce the financial risks they face.
In September, a Senate panel held hearings on the economy, and some lawmakers suggested that asset managers might be best off doing something other than buying and selling stocks and bonds.
The asset-manager community has been at a standstill since the financial crash.
For some, it is simply a time of transition.
For others, the crisis has become an unavoidable reality.
“I think the asset managers are in a tough spot.
There’s not a lot that they can do about it,” said Brian Baxley, chief investment officer at Wells Fargo Asset Management in Atlanta.
“I think they’ve been in a little bit of a bubble.
They’re in a very difficult position.
We’re not exactly sure what the future holds.
They’ve got to do something to get their act together.”
Baxley said that, for some, the current market conditions could mean they have to look to the future.
For his part, Pina sees that as a positive.
“I believe there’s a lot to look forward to,” Pinta said.
While the global investment community is trying, Pintas advice is to be patient, as this will take time to unfold.
“You need to be careful of the bubble and how quickly it pops,” he said.
Pina said he would like to see asset- managers focus more on growth, rather than taking on more risk, and he has some ideas on how they might do that.
“If they can start to diversify and invest more, I think they can have a more positive effect,” Pinas said.
The Trump administration has been criticized for not doing enough to help U.A.E. businesses, and Pina pointed to that as one reason for the market’s current turbulence.
“We have a government that doesn’t really want to help and really doesn’t want to invest,” he added.
“When you have a situation where there’s so many businesses in crisis, and when you’re facing the threat of a government policy that isn’t helpful, that really is a challenge for the asset- manager industry.”
The global investor market is also seeing the growth of private equity funds and private equity partnerships, which have been seen as the future of asset management.
“Private equity is the new hedge fund,” said Mark Bresnahan, president of the investment firm KKR Asset Management.
“Private equity companies are now being created to be a way to help people who are in trouble, not to help companies in a bubble.”