Insights

Investment & Middle Office

INVESTMENT & MIDDLE OFFICE MARKET COMMENTARY Q2, 2019

• Article by BRUIN Financial

INVESTMENT & MIDDLE OFFICE MARKET COMMENTARY Q2, 2019

MARKET OVERVIEW

There were many positives from the second quarter of the year including an increase on headcount and a drive to focus recruitment efforts on ESG and EMD. There has been a warm response from many clients with recent fund launches or newly created roles focused on ESG/ Sustainable investing.

A great example which encompasses sustainable investing is LGIM’s GIRL Fund, the main purpose to promote gender equality in the industry, but whilst we’ve seen very positive progress overall from our clients, there is still a crisis in investment management specifically relating to diversity.

Front office roles in particular are still heavily male dominated and there is still a large gender bias that applies to certain Front Office opportunities such as Product related roles and Equity Research. Many of the medium and larger asset managers have taken steps to create more roles that will attract woman into front office opportunities, however it still remains a challenge to attract female candidates to make this move, largely based on entrenched issues around culture.

From our conversations with candidates, the continuous key trend and interest is with ESG affiliated roles. As the millennial generation move up and into the industry, we have noticed greater focus on sustainable investing opportunities across product, research and solution roles. Taking emerging markets for example, why are they important? They drive growth in the global economy. There are many factors that will impact EMD performance but which impact performance the most – Bear Market, High Inflation. There are several factors to consider but although EMD has had a rocky few quarters, there has been a positive incline in recent quarters.

 

ROLE PROFILES

The demand for candidate talent has increased this quarter as many Investment houses have focused their recruitment efforts on both middle and front office hires. We noted a number of hires across Client Services, predominantly at the mid-level. These roles demand specific geographical coverage, client base and in some cases, additional European languages. In the wake of Brexit, many Investment Managers have redesigned their European coverage, focusing their team builds in the UK with fluent or native speaking European candidates.

Last quarter we saw a handful of Product roles across Product Development, Strategy and Manager all at the senior end. Despite the attraction of the roles, tempting these candidates proved difficult. We found that there was a lack of candidates at this level who were open to opportunities, however, if open; they expressed interest in ESG Product related roles.

Some clients also opted to go down the contracting route at the most senior end of Product Specialist roles which opened up the pool of candidates due to the lucrative day rates they could charge and the market certainly seemed buoyant.

Asset Managers are fulfilling the trend of hiring ESG analysts across the Investments space to bolster their growing responsible investment unit. To build robust ESG capabilities, firms require talent that can do each of these things well. They also require training of current investment and sales teams, as well as investments in data, analytics and reporting infrastructure to allow for full integration.

In addition to the ESG trend, Q2 has seen a bulk of Performance hires generally at the junior to mid-level. These roles require product specific candidates with some focusing on fixed income, others Equity. There has been a healthy attraction to these roles given that some Asset Managers have been flexible on the profiles of candidates, considering those from reporting backgrounds. We expect to see more volume in this space as we enter the third quarter of the year.

 

PREDICTIONS

With much speculation and intrigue around Sustainable investing, from both clients and candidates, we feel many Investment managers will have newly created functions allowing for many new and exciting opportunities to be created. ESG will continue to grow over the next quarter. We predict more of our clients will be involved more heavily with ESG strategies.

As we approach the summer period, we predict slower movement across hiring decisions, interview processes and headcount planning. Furthermore, we expect a similar impact on the candidate market. With this being said, the summer period takes us to the half way point of the financial year and generally we see our clients prepare for additional headcount in September.

As Brexit contingency plans come into action, we have seen more operations moved abroad across Luxembourg, Dublin and Poland. BRUIN’s European team have seen a corresponding increase in demand which we anticipate to continue as asset managers build up their European presence over 2019. Bloomberg Intelligence and the Simmons & Simmons survey found widespread agreement that pressure on profitability will rise. In the interim, clients will also look to hire multiple contractors as a “stopgap” to backfill BAU roles while their permanent staff help migrate these functions out to Europe.

How are we going to respond to IR-35? As the new regulation comes in to effect in April 2020, Investment managers are already assessing their internal policies and arranging plans for their

current contractors. We are also proactively working with a number clients trying to plan ahead and think of solutions as well as different ways they will be able to engage with contractors. With the financial services contracting market being so buoyant, planning ahead for this will be a crucial success factor.

 

MOVERS & SHAKERS

In line with market trends we have seen a number of key hires specialising in responsible investing. Premier Asset Management has appointed HSBC Global Asset Management’s Helene Winch as new Head of Responsible Investing which is a newly created role for the firm. Allianz Global Investors has appointed their own Beatrix Anton-Groenemeyer to lead its continued sustainability focus from her current role as global head of product specialists for fixed income. Aegon Asset Management has added two new hires to its global responsible investment team, including Brunno Maradei as new global head of ESG and Julius Huttunen as responsible investment manager.

The Investment consulting industry has also seen some movement. River & Mercantile has named James Barham as CEO where the take over from Mike Faulkner as part of the group’s succession plan. Redington has also promoted Sebastian Schulze, Nick Samuels and Lee Georgs to MDs as part of a scheme hoping to nurture “the next generation of leaders” in the investment industry.

Legal & General Investment Management has stepped up Sonja Laud (deputy CIO) to CIO following the departure of Anton Eser as he returns to South Africa. BNP Paribas Asset Management has hired Rob Gambi as its global head of investments and member of the executive committee whilst Amundi has hired Ryan Myerberg as their new Head of Absolute Return, Fixed Income following David Ric’s departure last year.

We have also seen change in the alternatives space with BMO Global Asset Management appointing Stewart Bennett as Global Head of Alternatives, a newly created role as the firm look to promote their new alternatives offering. Fidelity have appointed Andrew McCaffery as Global CIO of their alternatives and solutions business and Janus Henderson have added capability to its UK multi-asset and alternatives team the appointment of Alex Barr from Aberdeen Standard Investment Management.

BlackRock’s Mike Prentis, manager of the Smaller Companies trust (BRSC), is set to retire after 14 years with the firm and RBS chief executive Ross McEwan is stepping down from his role after returning the bank to profitability.

GAM strengthens its board of directors with the appointment of 3 females including former CEO of Syz Asset Management Katia Coudray, former group general counsel of Janus Henderson Jacqui Irvine and former senior vice president at AIG Monika Machon.

***

For more information about the market or current opportunities please contact one of our Consultants.