Automation is killing active fund management, but for IFAs, automation means less admin and more advising.
M&G shares have been sold – some 15% of the company for £850m, valuing the firm at just 1.5% of FUM. The company reportedly manage £350bn in total. So 15% of the company is £52bn, and they bought that for 1.5%.
It is shocking. A new low in financial services fund management. Pru paid 10% of FUM in 1999 for the same firm. The only change is the wholesale retreat of active fund management.
Markets see niche hedge funds actively interfering with mispricing. The vast bulk follow index strategies – so it is easier for hedgies to get ahead of the automation. That leaves traditional active fund managers stuck between the hedgies and the indexers. There is nowhere for them to go.
The rise of computer power lies behind the transformation of the City. Index funds rely on computing and automation to power the liquidity and huge fund collectives. Automation is the key, and it is coming to get your role. The survivors and thrivers are those to adapt the fastest.
For IFAs, automation means less admin and more advising.
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