AIC CONFERENCE 2019: PREPARING FOR THE NEXT GENERATION

Last week saw the well-attended annual AIC Conference, this time hosted by etc. Venues on Bishopsgate. The afternoon was a great insight into the current state of investment companies, the investment industry and the wider economy, with a superb line-up of speakers introduced and moderated by a truly engaging Huw Edwards.

Following Huw setting the scene – against a backdrop of Brexit – the chief executive of the AIC, Ian Sayers, gave an overview of how investment companies are faring, and what their future may hold. All messages were positive, with a key takeaway here being that investment in alternatives is rising considerably. Younger generations are focusing their research on ESG, as well as a high ROI, before investing money somewhere, and thi

s is a trend that seems to be likely to grow over time. However, it is also true that younger generations have less cash to invest.

Joachim Klement of Fidante Capital took the stage after Ian. He was looking forward to see what the investment landscape may look like over the coming years. A constant theme was that infrastructure has been doing well recently and is going to continue to be an attractive investment for investors. Much of the room agreed, however, that private equity was going to grow a considerable amount over the next three years, more so than alternative credit. In addition to Ian’s points, Joachim took the stance that alternatives were likely to grow substantially over the next few years as well, especially in the ESG space that is currently dominated by equities and fixed income. Rather positively, the data put forward suggested that even in a worst-case scenario Brexit, listed investment funds are likely to grow 11% year-on-year over the next three years.

Helen Pitcher of Advanced Boardroom Excellence gave a talk looking at the idea of whether boards were truly future-proof. This primarily took the theme of diversity and equal pay, with Helen referring to PwC’s research on the topics – available here. Helen mentioned the fact that times were changing, referencing the addition of a computer programme to a board in Hong Kong. Continuing the theme of potentially great change, Guy Rainbird of the AIC came to the stage to speak about Labour’s economic vision for the UK should they come to power. He outlined their view on corporation tax and their will to overhaul the financial sector, as well as the approach of devolving power to a more regional level. One of Labour’s aims is to raise the corporation tax to 26% – much above the current 19%. This would be a huge rise, especially at an uncertain time, but would be fairly mid-range on a global level, with France and Germany being higher still.

The room was given another chance to voice opinion with the panel session involving Laura Bailey of Qadre, Hortense Bioy of Morningstar, and Rob McCargow of PwC. The question asked which issue would impact the asset management industry the most over the next three years: ESG, blockchain or AI. The room voted AI the clear winner. Hortense was at the conference to discuss ESG and referenced research that found ESG investments are not coming at a cost. If this is true, then it means that investors can focus more on ESG and still have a high ROI – a win-win situation. Rob spoke about AI and how it is currently affecting the asset management industry, predicting that it most likely won’t replace fund managers. A human element is always needed. However, that same AI is likely to drive a global GDP gain of $15.7tn by 2030. Laura gave the room a whistle-stop tour of blockchain and how it can be used in the asset management industry, with less need for intermediaries and an instant settlement time. 

Martin Wolf of the Financial Times was the last – and certainly not least – speaker to take the stage, imparting his wisdom of the economy and how it may look over the next ten years. A large task to undertake in only twenty minutes, but he did a brilliant job and was very insightful. Martin’s conclusion said that in ten years, Asia will account for around 50% of the world’s economy, with the USA being eclipsed by China. There is no logical reason this cannot and will not happen, considering that Asia accounts for over half of the world’s population. However, this may not be a smooth transition, and geo-political tensions will surely continue as the USA continues to lose ground to China. For the UK, the future was a little more uncertain, but Martin’s approach was that our role in the world will probably lessen when we leave the EU.

Overall, the afternoon was very interesting and a great opportunity to hear from some very insightful speakers. A big thank you to the AIC for organising another great event.