Disruption in the asset management industry is imminent, wrote Katina Stefanova, David Teten and Brent Beardsley for Institutional Investor. Due to a combination of new technologies, shifting demographics and changing client demands, the asset manager of the future must self-regulate, adopt corporate governance by investment firms, invest in technology, and cultivate and keep top-notch talent. This is not a prediction, but rather a wake-up call about how the industry is changing.
Since May Day 1975, when 180 years of fixed-rate commissions ended on Wall Street, prognosticators have insisted that sell-side equity research’s days are numbered. And yet, year after year, the sell side has proved surprisingly resilient. While markets quake and geopolitics rumble, the buy side continues to need and value the sell-side. On the 45th anniversary of our annual ranking of Wall Street’s top equity analysts, Institutional Investor rolled out this year’s top 322 analysts from 30 firms — with J.P. Morgan in the lead. Check out the full list of winners.
Finding a truly exceptional asset manager is challenging, even for the most sophisticated investor. Most pitch investors by leading with the opportunities they see in the market or point to lofty end goals for those who invest with them. But not Boston-based Grantham, Mayo, Van Otterloo & Co., who open with risks: risks to the market, risks to your investments and, indeed, risks to your career if you follow their ideas all the way through. While their approach — determining fair value by looking at asset valuation trends over the entire history of the market — might be less than conventional, their long track record of successfully calling market bubbles speaks for itself.
Scott Borgerson and his team of quants at hedge fund firm CargoMetrics are at the forefront of harnessing information for potentially big investment advantages. Linking satellite signals, shipping data and proprietary analytics for its own trading in commodities, currencies and equity index futures, the start-up investment firm has a vision to map historically and in real time what’s really going on with economic supply and demand across the planet. The problem, Borgerson says, is enormous, but the reward, if realized, is huge.
The highest bidder for lunch with Warren Buffet at Glide Foundation’s 2010 and 2011 auction, Weschler is now one of the billionaire’s two top investment managers at Berkshire Hathaway and a likely inheritor of his profile. Institutional Investor’s Miles Irish spoke with the hedge fund manager, who says he enjoys considerable autonomy as an investor. Forced to play his own devil’s advocate, he says he’s a bear on a given stock one morning and a bull the next.
This summer, Upstart ACE engineered one of the largest insurance takeovers in history, acquiring venerable Chubb Corp. for more than $28 billion. As chairman and CEO of postmerger Chubb Corp., Greenberg turned the company from a midsize reinsurer into one of the world’s largest multiline insurance companies. He says he will be betting on the same acquisition strategy and obsession with underwriting as he continues to lead this select group of insurers.
The hedge fund industry has grown to nearly $3 trillion in assets, up from $1 trillion a decade ago. At the heart of this growth: people. This year’s ranking examines the elite colleges that produced Institutional Investor’s most recent roundup of hedge fund rising stars. While many hailed from University of Pennsylvania’s Wharton School, among other Ivy League schools, our list consistently includes stars with less typical backgrounds. It turns out you don’t have to graduate from an Ivy League university. But it helps.
It looks like the solid choice for a new economic doomsday scenario: The country’s student loan debt now sits north of $1.3 trillion, according to the Federal Reserve Bank of New York. More and more students are taking out loans for their education and going into default. Students who are behind on or have defaulted on their loan debt take a major hit to their credit scores, which can limit their ability to find jobs and buy cars and homes. As default rates climb, investors are shorting companies from debt manager Navient to student-housing providers, which poses the question: How did we get here? Read Bailey McCann’s take.
This year’s top financial technologists have leveraged cloud innovations and agile software techniques to accomplish more, on a larger scale, than ever before. Those who excel in financial services — including the executives, innovators and entrepreneurs spotlighted in Institutional Investor’s Tech 50 ranking — meet three simple benchmarks: better, faster, cheaper. Starting at the top with Bank of America Corp. chief operations and technology officer Catherine Bessant, many winners are applying advanced technologies that allow them to accomplish more within budget and are doing so at a global scale. Such innovation has not been feasible until recently.