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irishfunds.ie
17 May 2018
Irish Funds Annual Global Funds
Conference 2018
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Breakfast kindly sponsored by:
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Elena Canavan
Asset Management & Investment Funds Solicitor
William Fry
MC
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Premium Sponsors
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Event Partners
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Wi-Fi & Audience Interaction
• Wi-Fi : CCDGuest
no password required
• Audience Interaction
www.Sli.do #IFConf18
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Brian Forrester
Chairperson, Irish Funds
Partner, Deloitte
Opening Address from Irish Funds
Chairperson
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Panel Discussion: Innovative Products
Olwyn Alexander, PwC (Moderator)
Gareth Murphy, Standard Life Aberdeen
Joe LaRocque, Legg Mason
Ann Prendergast, SSGA
Steven Yadegari, Cranmer Rosenthal McGlynn
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irishfunds.ie
Paschal Donohoe TD
Minister for Finance & Public Expenditure
and Reform
Government Address
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Panel Discussion: Innovative ProductsPrivate Markets, Real Assets and Infra Debt
Ileana Sodani, BNY Mellon (Moderator)
Philip Doyle, AMP Capital
Michael Looney, Carysfort Capital
Ranesh Ramanathan
Luke Benjamin, Deutsche Bank
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Coffee Break kindly sponsored by
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irishfunds.ie
Ruairi O’Healai
EMEA COO and CEO
Morgan Stanley Investment Management
Keynote Address
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Contents
1. Market Overview (MS Research)
2. Regulatory Engagement
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Morgan Stanley Research Overview
• Dedicated team that is focused on the asset management industry
• Recent Bluepaper (with Oliver Wyman) on the responses required to changing AM industry:
Wholesale Banks & Asset Managers: Winning Under Pressure (14 Mar 2018)
• Also recently produced insights on trends in the industry: Tackling the Cost Challenge:
Latest Trends & Opportunities (19th March 2018)
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Winners in 2017 still play to MS Research asset management
barbell and axis of growth - Alternatives, Multi asset,
ETF/Passive, and Italian managers among winners
Global Top 20: 2017 Net New Money (% annualized)
• Growth remains skewed to both ends of the barbell either in low cost passive
or alternatives
• Low rates and QE-driven asset rotation in search of returns still driving
momentum in Italian wealth management and supporting recovery in
European managers; e.g., Banca Generali, Azimut, Eurizon
• Global ex-iShares Avg: +3.8% (Trads +3.2%)
• US Avg: +3.0% (Trads: +2.8%, Alts: +7.0%)
• EU Avg: +4.3% (Trads: +4.1%, Alts: +17.1%)
4%
7%
9%
9%
10%
11%
12%
13%
13%
13%
14%
14%
14%
15%
15%
16%
16%
19%
19%
20%
24%
Global Avg
Eurizon Capital
DZ Bank
UBS
Apollo Global
Eaton Vance
Brookfield Asset…
GAM
M&G
Jupiter
KKR
PIMCO
Banca Generali
Ares Management
Azimut
Liontrust
Man Group
Partners Group
iShares
Ashmore
Vanguard (ETFs)
2017 NNM% - Top 20
Source: “Tackling the Cost Challenge: Latest Trends & Opportunities”, 19th March 2018
Underlying Source: Company Data, Morgan Stanley Research, data as of YE 2017
Note; analysis covers ~81 asset managers globally with ~$43trn of AuM including listed, unlisted and captive names. Represents the annualized net new money growth rate. Note these averages were calculated using a AuM-weighted average.
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Top MF & ETF Asset Gatherers: 2017
BlackRock & Vanguard Gathering ~$800 Billion of MF & ETF Assets in 2017
EuropeUSGlobal
403
384
105
60
44
37
36
35
31
29
27
25
22
21
19
19
19
18
17
16
BlackRock
Vanguard
PIMCO
Amundi
State Street
Fidelity
Dimensional
JPMorgan
Schwab
Invesco
MCG
Nomura
Eurizon
UBS
Dreyfus
AB (AllianceBernstein)
Morgan Stanley
Union Investment
Northern
Legal & General
Top 20 Global Asset Gatherers ($B)
361
260
39
34
33
31
28
19
17
15
14
10
9
9
9
9
8
8
8
7
Vanguard
BlackRock
Fidelity Investments
State Street
Pimco
Dimensional Fund Advisors
Schwab
Dreyfus
Northern Funds
American Funds
Bridge Builder
First Trust
Lord Abbett
Guggenheim Investments
Baird
Invesco
Destinations Funds
Nuveen
Oakmark
AllianceBernstein
Top 20 US Asset Gatherers ($B)
139
56
51
26
20
19
18
17
16
15
14
13
13
12
12
11
11
11
10
9
BlackRock
PIMCO
Amundi
JPMorgan
UBS
Eurizon
Invesco
Allianz Global Investors
Vanguard
Union Investment
Legal & General
M&G
Northern Trust
Morgan Stanley
Xtrackers
Mercer Global Investments
Credit Suisse
GAM
AB (AllianceBernstein)
State Street
Top 20 European Asset Gatherers (€B)
Source: “Tackling the Cost Challenge: Latest Trends & Opportunities”, 19th March 201
Underlying Source: Morningstar Direct, Morgan Stanley Research. Est. flows through December 31, 2017
Active MF Flows
Passive MF Flows
Money Market Flows
ETF Flows
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The Barbell lives on – ETFs and private markets standout,
while global flows accelerated from 1% in 2016 to 4% (on a
dollar-weighted basis) in 2017
ETFs and Alternatives continue to attract higher inflows in 2017
ETFs
Private Market / Alternative
Global
Traditionals
0.0%
5.0%
10.0%
15.0%
20.0%
25.0%
0 20 40 60 80 100 120
9M17
Net
New
Mo
ney
Revenue Margin (bps)3.6%
4.1%
8.7%
20.7%
Traditionals
Global
Private Market /Alternative
ETFs
Source: “Tackling the Cost Challenge: Latest Trends & Opportunities”, 19th March 2018
Underlying Source: Company Data, Morgan Stanley Research, data as of YE 2017. Note; analysis covers ~81 asset managers globally with ~$43trn of AuM including listed, unlisted and captive names. Represents the annualized net new money growth rate. Note these averages were calculated using a AuM-weighted average.
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irishfunds.ie
While passive flows in the US have grown significantly at the
expense of active, active assets in Europe have been stickier
Source: “Tackling the Cost Challenge: Latest Trends & Opportunities”, 19th March 2018
Underlying Source: Morningstar Direct, Morgan Stanley Research; US data through December 31, 2017; Europe data through December 31, 2017
(500)
-
500
1,000
1,500
2,000
2,500
Apr
-08
Aug
-08
Dec
-08
Apr
-09
Aug
-09
Dec
-09
Apr
-10
Aug
-10
Dec
-10
Apr
-11
Aug
-11
Dec
-11
Apr
-12
Aug
-12
Dec
-12
Apr
-13
Aug
-13
Dec
-13
Apr
-14
Aug
-14
Dec
-14
Apr
-15
Aug
-15
Dec
-15
Apr
-16
Aug
-16
Dec
-16
Apr
-17
Aug
-17
Dec
-17
Thou
sand
s
European Fixed Income Active and Passive Flows (€bn)
Active EU Flows Passive EU Flows
2,156
274
1,882
417
176
-100
0
100
200
300
400
500
600
700
Dec
-17
Aug
-17
Apr
-17
Dec
-16
Aug
-16
Apr
-16
Dec
-15
Aug
-15
Apr
-15
Dec
-14
Aug
-14
Apr
-14
Dec
-13
Aug
-13
Apr
-13
Dec
-12
Aug
-12
Apr
-12
Dec
-11
Aug
-11
Apr
-11
Dec
-10
Aug
-10
Apr
-10
Dec
-09
Aug
-09
Apr
-09
Dec
-08
Aug
-08
Apr
-08
European Equity Active and Passive Flows (€bn)
Active EU Equity Flows Passive EU Equity Flows
593
European Equity Cumulative Flows (€B)Domestic US Equity Cumulative Flows ($B)
Fixed Income Cumulative Flows ($B) European Fixed Income Cumulative Flows ($B)
(1,052)
1,188
136
(1,500)
(1,000)
(500)
-
500
1,000
1,500
Dec
-17
Aug
-17
Apr
-17
Dec
-16
Aug
-16
Apr
-16
Dec
-15
Aug
-15
Apr
-15
Dec
-14
Aug
-14
Apr
-14
Dec
-13
Aug
-13
Apr
-13
Dec
-12
Aug
-12
Apr
-12
Dec
-11
Aug
-11
Apr
-11
Dec
-10
Aug
-10
Apr
-10
Dec
-09
Aug
-09
Apr
-09
Dec
-08
Aug
-08
Active US Equity Passive US Equity Total US Equity
1,112
928
(500)
-
500
1,000
1,500
2,000
2,500
Dec
-17
Aug
-17
Apr
-17
Dec
-16
Aug
-16
Apr
-16
Dec
-15
Aug
-15
Apr
-15
Dec
-14
Aug
-14
Apr
-14
Dec
-13
Aug
-13
Apr
-13
Dec
-12
Aug
-12
Apr
-12
Dec
-11
Aug
-11
Apr
-11
Dec
-10
Aug
-10
Apr
-10
Dec
-09
Aug
-09
Apr
-09
Dec
-08
Aug
-08
Passive US Fixed Income Active US Fixed Income
2,040
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irishfunds.ie
MS Research’s disruption matrix highlights the threats to the
Asset Management industry’s $83 billion profit pool and 35-
40% operating margins (meaningfully above other industries)
Source: “Tackling the Cost Challenge: Latest Trends & Opportunities”, 19th March 2018
Impact Disruptions Solutions
Top-line
• Macro environment: low growth and low rates weighing on
active mgr performance placing significant pressure on fees
• Demographics: Baby boomers retiring and drawing down on
savings. LT increasing inequality a headwind
• Optimize investment returns net of fees and taxes
• Tune-up engines with Quant/Factors, harness big data and machine
learning and seek alternative sources of liquidity
Bottom-line
• Regulation: raises cost of doing business
• Technology: software-driven disruptors (robos) undercutting
incumbent’s fees
• Infrastructure: Increased spend required to enhance
competitive positioning
• Reset the cost base: reallocate resources toward higher growth
areas
• Engage in strategic partnerships and acquisitions that deliver scale
as well as fill product gaps and capabilities
Share shift
• New competitors and intensifying competition among
existing players
• Substitute products: ETFs offer greater tax efficiency and
liquidity at meaningfully lower cost as price of beta drops
• Regulation: shifts more money into passives/ETFs
• Demographics: Millennials with new/different priorities and
buying behavior
• Innovate with new products and solutions that provider greater
value for clients with risk management at the core; yield, niche, longer
duration. Includes multi-asset/solutions and private assets
• Redefine the active manger’s value proposition and target
millennials with ESG/SRI
• Shift from ‘distribution’ to ‘client acquisition’… embrace digital as
a form of customer acquisition
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Tackling the Cost Structure
Realistic timeline? At least five years for meaningful change…
Source: “Tackling the Cost Challenge: Latest Trends & Opportunities”, 19th March 2018
Underlying Source: Oliver Wyman Analysis
1. Outsource More Functions to Improve Efficiency/Reduce Costs
2. Close and/or Merge Funds… Rationalize the Product Set
3. Merge certain affiliates and centralize various functions
including trade execution and middle/back office
4. Automate and digitize processes
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Examples of Regulatory Implementation Driving
Bottom Line Cost
There is a recent example from MiFID II of regulatory interpretation driving additional cost and
complexity for asset managers
Costs and Charges
Background• Under MiFID II rules, firms have to report detailed costs and charges data on an ex ante and ex post basis
• Reporting needs to include details of “implicit” transaction costs
Challenges
• No consistent methodology was prescribed by the regulation for implicit transaction costs
• PRIIPS methodology identified two main approaches:
• Arrival Price
• Spread calculation
• Many firms have used the PRIIPS guidance in order to implement MiFID compliant solutions
Response
• Engagement with regulators has continued with the current requirement for all firms to move to the arrival price methodology by 2020
• For some firms this will require additional cost in order to implement the relevant processes, in addition to costs incurred to date for MIFID
• Head of the FCA has also confirmed they have some concerns that the methodology: “carries a risk that it is leading to literally accurate disclosure which is not providing useful context”1
Impact
• Unintended consequence of lack of consistency has led to investor confusion and unclear information being reported e.g. negative transaction costs
• “The way that the new methodology to calculate transaction costs was designed will confuse and mislead investors. Regulators must listen to the numerous objections and review this
damaging methodology,”2
• While net performance includes all costs and is a clear gauge of fund manager performance, focus on Transaction Cost numbers could distort investor preferences
1. Speech delivered by Andrew Bailey at the London Business School, 26th April 2018
2. Chris Cummings, Head of the Investment Association, Financial Times, Jan 26th 2018
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Conclusion
• Industry has benefitted from Global market growth, however fee compression remains a consistent trend across the
industry
• While passive flows in the US have grown significantly at the expense of active, active assets in Europe have been
stickier
• Success has been found by firms focused on ETFs, Alternatives, and Multi-Asset
• In order to succeed in the long term, firms should focus on controlling costs from disruptive trends in the industry and
increasing regulatory demands
• Focus should be on increasing regulator engagement
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Derville Rowland
Director General, Financial Conduct
Central Bank of Ireland
Update from the Central Bank of Ireland
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Panel Discussion: RegulationThe Regulation Horizon- What to look out for in Ireland, Europe and Beyond
Sven Kasper, State Street (Moderator)
Adrian Whelan, BBH
Gerry Cross, Central Bank of Ireland
Robert Taylor, FCA
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Justina Deveikyte
Associate Director, European Institutional Research,
Cerulli Associates
Distributing Alternative Investment
Products
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European Hedge Fund Industry To Keep Growing
Global Hedge Fund Flows by Region, 2015–2017 (€ billion)
66.5
26.5
-1.1
-32.2
-46.5
-29.6
-15.3
-0.3
2.4
27.0
-3.7
11.3
-€ 60
-€ 40
-€ 20
€ 0
€ 20
€ 40
€ 60
€ 80
North America Europe Asia-Pacific Rest of World
2015 2016 2017
Source: Preqin
• Inflows amounted to €27.0 billion in 2017, in
sharp contrast to the previous year’s outflows
of €29.6 billion
• Europe-headquartered managers’ hedge fund
assets under management totalled €610.3
billion at the end of last year
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European Hedge Fund Industry To Keep Growing
• Hedge funds have come to realize that launching UCITS versions of their strategies can
dramatically increase their standing—globally as well as in Europe
• Establishing a fund has become more expensive, which has contributed to the
polarization of the alternative UCITS industry
• However, rather than upping the number of products, most providers should focus on
improving their access to distribution channels
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Asset Managers: Greatest Challenges to the Development and Delivery of Alternative Investments, 2017
6%
11%
18%
22%
28%
72%
35%
28%
78%
41%
56%
61%
28%
65%
67%
11%
41%
22%
11%
0% 20% 40% 60% 80% 100%
Sustainability of assets/retaining alternative assets longer term
Subadvisory agreements tending to be more expensive foralternative strategies
Brand risk
Maintaining sufficiently high fees to offset higher costs
Distribution agreements (getting on major platforms such asMerrill Lynch)
Regulatory measures (UCITS V directive limits on leverage)
Raising sufficient assets to be profitable
Major challenge Moderate challenge Not a challenge
Source: Cerulli Associates, The Cerulli Report - European Alternative Investments 2018: The Next Steps in Product Development
• With more managers launching products, raising sufficient assets is becoming ever more
difficult
• MiFID II will also play a considerable role in Europe’s alternatives industry-distributors
will opt to work with fewer managers
Distribution Challenges
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Distribution Channels: Switzerland
Asset Managers: Most Important Distribution Channels Over the Next 12–24 Months, 2017
Source: Cerulli Associates, The Cerulli Report - European Alternative Investments 2018: The Next Steps in Product Development
Funds of funds, 3% Independent financial advisors, 3%
Investment consultants, 4%
Retail bank platforms, 4%
Family offices, 9%
Discretionary fund managers, 13%
Private bank platforms, 29%
Direct to institutional investors, 36%
Swiss Investors' Aggregated Average Allocation to Hedge Funds, June 2017
Asset manager, 8% Bank, 2%
Multi-family office, 14%
Single-family office, 19%
Foundation, 8%
Insurance company, 2%
Investment bank, 4%
Private sector pension fund, 7%
Public pension fund, 6%
Wealth manager, 2%
• Distributing their funds via private banks can be challenging for smaller managers,
because banks partner with only a limited number of funds. But once on their radar,
boutiques may be selected sooner by a bank than by an institutional investor
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irishfunds.ie
Distribution Channels: UK
Asset Managers: Most Important Distribution Channels Over the Next 12–24 Months, 2017
Source: Cerulli Associates, The Cerulli Report - European Alternative Investments 2018: The Next Steps in Product Development
2%
3%
0%
0%
23%
2%
13%
7%
13%38%
0%
3%
3%
3%
6%
6%
10%
10%
21%
38%
0% 5% 10% 15% 20% 25% 30% 35% 40% 45% 50%
Independent financial advisors
Single-family/multi-family offices
Mixed/multi-asset fund providers
Other
Investment consultants
Retail bank platforms
Discretionary fund managers
Funds of funds
Private bank platforms
Direct to institutional investors
France UK
• Smaller alternatives managers have found it difficult to meet UK consultants’ criteria, but
opportunities are opening up thanks to the increased business flowing to specialist and
implemented consultants
• Implemented consultants are more adventurous when selecting specialist funds for their
fiduciary mandates than they are for their advisory mandates
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irishfunds.ie
Alternative UCITS Platforms
• Major fund platform providers increasingly see
alternative UCITS as an important revenue driver
• Platforms remove much of the regulatory and
compliance burden for the underlying managers, as
well as providing a ready-made marketing and
distribution network
• Getting selected by a platform is also not a given, with
platform providers seemingly becoming more selective
Largest 5 platforms, 65%
The rest, 35%
Source: Kepler Partners LLP
UCITS Platforms by Assets, 3Q 2017
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irishfunds.ie
Private banks and discretionary fund managers are a key distribution
channel in Europe, particularly in Switzerland and France. Cerulli
therefore decided to run a separate survey of private banks to understand
their use of alternatives in their clients’ portfolios and the key factors for
selecting alternative fund managers
Private Banks
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irishfunds.ie
Private Banks
Private Banks: Typical Allocation to Alternative Investments Currently and Anticipated Changes, 2018
20%
28%
32%
12%
4% 4%
0%
10%
20%
30%
40%
0% 1% to 5% 6% to 10% 11% to 20% 21% to 50% More than 50%
Typical Allocation Currently
Increase32%
Stay the same68%
Changes Over the Next 12–24 Months
Source: Cerulli Associates, The Cerulli Report - European Alternative Investments 2018: The Next Steps in Product Development
• Demand from private banks and discretionary fund managers for more complex strategies
has risen noticeably. However, despite an increased recommended allocation of up to 20%
to alternatives in advisory mandates, most still hold 5% or less
• Around one-third of private banks expect their clients’ typical allocation to alternative investments, as well
as alternative UCITS, to increase over the next 12 to 24 months
• Cerulli believes that there is still plenty of room for further growth among these retail channels
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irishfunds.ie
Private Banks
Private Banks: Most Important Factors When Conducting Due
Diligence on Third-Party Alternative Asset Managers, 2018
Source: Cerulli Associates, The Cerulli Report - European Alternative Investments 2018: The Next Steps in Product Development
8%
20%
28%
32%
48%
56%
56%
60%
72%
84%
24%
68%
24%
52%
40%
40%
40%
40%
20%
12%
68%
12%
48%
16%
12%
4%
4%
8%
4%
0% 20% 40% 60% 80% 100%
Morningstar or similar rating system
Manager AUM
Relative performance versus benchmark
Volatility
Manager tenure
Style consistency
Relative performance versus peers
Fees and expenses
Risk controls
Performance
Very important Somewhat important Not important
• For managers that already have an existing
fund on a platform, the chances of getting
another one listed are significant higher
• Asset managers without existing listed funds
will need to be able to offer highly differentiated
products
• Asset managers with products that match
private bank investment team’s needs have a
better chance of being approved
• When choosing partners, private banks often
prefer niche alternative managers that are
experts in their field as this enables them to
enhance their product offering
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irishfunds.ie
Private Banks
Private Banks: Total Number of Direct Single Hedge Fund Managers Private Banks Are Invested With Currently and Anticipated Changes Over the Next 12–24 Months, 2018
Source: Cerulli Associates, The Cerulli Report - European Alternative Investments 2018: The Next Steps in Product Development
24% 24%
16%
24%
12%
0%
10%
20%
30%
None 1–5 6–10 11–20 More than 20
Number of Direct Single Hedge Funds Currently
We will keep the number of managers the same
84%
We plan to reduce the number of managers we are invested with
16%
Changes Over the Next 12–24 Months
• Most private banks plan to keep the same number of direct single hedge fund managers they
are invested with over the next 12-24 months. Securing partnerships with banks remains a
challenge for asset managers
• Some 16% of the private banks that responded to our survey plan to reduce the number of
managers they are invested with, while others will be more selective in the future
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irishfunds.ie
Subadvisory Market
Largest European Sponsors by Alternative Subadvised Funds Assets Under Management, 2017 (€ billions)
6.6
5.04.5
3.0
2.52.0 1.8 1.8
1.5
7.2
€0
€1
€2
€3
€4
€5
€6
€7
€8
Mercer Merrill Lynch Schroders MorganStanley
FranklinTempleton
DWS Rothschild Blackstone Lyxor Others
Source: Cerulli Associates
• Active management is comfortably dominant in the European subadvisory market
• Liquid alternatives also increasingly popular and currently amount to €35.8 billion
• European subadvisory market is growing at an impressive pace; Cerulli data shows
that it currently amounts to €482 billion
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irishfunds.ie
Subadvisory Market
Asset Managers: Importance of Certain Attributes to Sponsors, 2017
9%
9%
9%
18%
45%
55%
55%
73%
91%
91%
82%
73%
55%
73%
55%
36%
45%
27%
9%
9%
9%
18%
36%
9%
9%
0% 20% 40% 60% 80% 100%
Addressing key person risk
Portfolio manager investment in own strategy
Environmental, social, governance (ESG) factors ininvestment process
Turnover of advisory personnel
Style purity
Portfolio manager tenure
Ability to manage to stated investment objective
Experience of investment staff
Investment philosophy and process
Performance metrics (e.g., relative, risk-adjusted,absolute)
Very important Somewhat important Not important
• To target the subadvisory market,
managers need persistence and patience.
Agreeing to a subadvisory deal is a long
and onerous process
• Managers should focus on those sponsors
that are more active in terms of launching
funds, because they are more likely to
offer new opportunities
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irishfunds.ie
James Norris
International Managing Director
Vanguard Asset Management
Keynote Address
![Page 40: 17 May 2018 - Amazon Web Services · 17 May 2018 Irish Funds Annual Global Funds Conference 2018. irishfunds.ie ... Morgan Stanley Research; US data through December 31, 2017; Europe](https://reader035.vdocument.in/reader035/viewer/2022070717/5edc4bacad6a402d6666e774/html5/thumbnails/40.jpg)
James Norris
Managing Director
Head of Vanguard International
How technology is changing the way we work and democratising advice for investors
![Page 41: 17 May 2018 - Amazon Web Services · 17 May 2018 Irish Funds Annual Global Funds Conference 2018. irishfunds.ie ... Morgan Stanley Research; US data through December 31, 2017; Europe](https://reader035.vdocument.in/reader035/viewer/2022070717/5edc4bacad6a402d6666e774/html5/thumbnails/41.jpg)
MILLIONS OF JOBS ARE SUSCEPTIBLE TO AUTOMATION
FOR PROFESSIONAL INVESTOR USE ONLY. NOT FOR PUBLIC DISTRIBUTION.
Source: Carl Benedikt Frey and Michael A. Osborne, 2016. The future of employment: How susceptible are jobs to computerisation? Oxford,
England: Oxford Martin Programme on Technology and Employment, University of Oxford.
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43%
Economists
MILLIONS OF JOBS ARE SUSCEPTIBLE TO AUTOMATION
FOR PROFESSIONAL INVESTOR USE ONLY. NOT FOR PUBLIC DISTRIBUTION.
Source: Carl Benedikt Frey and Michael A. Osborne, 2016. The future of employment: How susceptible are jobs to computerisation? Oxford,
England: Oxford Martin Programme on Technology and Employment, University of Oxford.
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43%
Economists
64%
Portfolio
managers
MILLIONS OF JOBS ARE SUSCEPTIBLE TO AUTOMATION
FOR PROFESSIONAL INVESTOR USE ONLY. NOT FOR PUBLIC DISTRIBUTION.
Source: Carl Benedikt Frey and Michael A. Osborne, 2016. The future of employment: How susceptible are jobs to computerisation? Oxford,
England: Oxford Martin Programme on Technology and Employment, University of Oxford.
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MILLIONS OF JOBS ARE SUSCEPTIBLE TO AUTOMATION
43%
Economists
64%
Portfolio
managers
58%
Financial
advisers
FOR PROFESSIONAL INVESTOR USE ONLY. NOT FOR PUBLIC DISTRIBUTION.
Source: Carl Benedikt Frey and Michael A. Osborne, 2016. The future of employment: How susceptible are jobs to computerisation? Oxford,
England: Oxford Martin Programme on Technology and Employment, University of Oxford.
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TECHNOLOGY IS DRIVING AUTOMATION
FOR PROFESSIONAL INVESTOR USE ONLY. NOT FOR PUBLIC DISTRIBUTION.
![Page 46: 17 May 2018 - Amazon Web Services · 17 May 2018 Irish Funds Annual Global Funds Conference 2018. irishfunds.ie ... Morgan Stanley Research; US data through December 31, 2017; Europe](https://reader035.vdocument.in/reader035/viewer/2022070717/5edc4bacad6a402d6666e774/html5/thumbnails/46.jpg)
BASICHarvesting
Moving objects
Recording information
TECHNOLOGY IS DRIVING AUTOMATION
FOR PROFESSIONAL INVESTOR USE ONLY. NOT FOR PUBLIC DISTRIBUTION.
![Page 47: 17 May 2018 - Amazon Web Services · 17 May 2018 Irish Funds Annual Global Funds Conference 2018. irishfunds.ie ... Morgan Stanley Research; US data through December 31, 2017; Europe](https://reader035.vdocument.in/reader035/viewer/2022070717/5edc4bacad6a402d6666e774/html5/thumbnails/47.jpg)
BASIC REPETITIVEHarvesting
Moving objects
Recording information
Inspecting
Assembling
Processing information
TECHNOLOGY IS DRIVING AUTOMATION
FOR PROFESSIONAL INVESTOR USE ONLY. NOT FOR PUBLIC DISTRIBUTION.
![Page 48: 17 May 2018 - Amazon Web Services · 17 May 2018 Irish Funds Annual Global Funds Conference 2018. irishfunds.ie ... Morgan Stanley Research; US data through December 31, 2017; Europe](https://reader035.vdocument.in/reader035/viewer/2022070717/5edc4bacad6a402d6666e774/html5/thumbnails/48.jpg)
BASIC REPETITIVE ADVANCEDHarvesting
Moving objects
Recording information
Inspecting
Assembling
Processing information
Maintaining relationships
Applying knowledge
Thinking creatively
Assisting/caring for others
TECHNOLOGY IS DRIVING AUTOMATION
FOR PROFESSIONAL INVESTOR USE ONLY. NOT FOR PUBLIC DISTRIBUTION.
![Page 49: 17 May 2018 - Amazon Web Services · 17 May 2018 Irish Funds Annual Global Funds Conference 2018. irishfunds.ie ... Morgan Stanley Research; US data through December 31, 2017; Europe](https://reader035.vdocument.in/reader035/viewer/2022070717/5edc4bacad6a402d6666e774/html5/thumbnails/49.jpg)
WE BELIEVE THESE STUDIES CONTAIN THREE FLAWS
FOR PROFESSIONAL INVESTOR USE ONLY. NOT FOR PUBLIC DISTRIBUTION.
Source: Carl Benedikt Frey and Michael A. Osborne, 2016. The future of employment: How susceptible are jobs to computerisation? Oxford,
England: Oxford Martin Programme on Technology and Employment, University of Oxford.
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Each job only
has one task1
WE BELIEVE THESE STUDIES CONTAIN THREE FLAWS
FOR PROFESSIONAL INVESTOR USE ONLY. NOT FOR PUBLIC DISTRIBUTION.
Source: Carl Benedikt Frey and Michael A. Osborne, 2016. The future of employment: How susceptible are jobs to computerisation? Oxford,
England: Oxford Martin Programme on Technology and Employment, University of Oxford.
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Each job only
has one task1 2The underlying tasks
of jobs don’t change
WE BELIEVE THESE STUDIES CONTAIN THREE FLAWS
FOR PROFESSIONAL INVESTOR USE ONLY. NOT FOR PUBLIC DISTRIBUTION.
Source: Carl Benedikt Frey and Michael A. Osborne, 2016. The future of employment: How susceptible are jobs to computerisation? Oxford,
England: Oxford Martin Programme on Technology and Employment, University of Oxford.
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Each job only
has one task1 2Technology acts only as a
substitute for human
labour
3The underlying tasks
of jobs don’t change
WE BELIEVE THESE STUDIES CONTAIN THREE FLAWS
FOR PROFESSIONAL INVESTOR USE ONLY. NOT FOR PUBLIC DISTRIBUTION.
Source: Carl Benedikt Frey and Michael A. Osborne, 2016. The future of employment: How susceptible are jobs to computerisation? Oxford,
England: Oxford Martin Programme on Technology and Employment, University of Oxford.
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10%
30%
50%
80%
1900
2000
2015
FUTURE
WORK OF THE FUTURE WILL BE DOMINATED BY ADVANCED TASKS
Sources: Vanguard calculations, based on data from McKinsey & Company, US Bureau of Labour Statistics, and US Department of Labour. O*Net OnLine.
FOR PROFESSIONAL INVESTOR USE ONLY. NOT FOR PUBLIC DISTRIBUTION.
![Page 54: 17 May 2018 - Amazon Web Services · 17 May 2018 Irish Funds Annual Global Funds Conference 2018. irishfunds.ie ... Morgan Stanley Research; US data through December 31, 2017; Europe](https://reader035.vdocument.in/reader035/viewer/2022070717/5edc4bacad6a402d6666e774/html5/thumbnails/54.jpg)
Source: Carl Benedikt Frey and Michael A. Osborne, 2016. The future of employment: How susceptible are jobs to computerisation? Oxford,
England: Oxford Martin Programme on Technology and Employment, University of Oxford.
FOR PROFESSIONAL INVESTOR USE ONLY. NOT FOR PUBLIC DISTRIBUTION.
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VANGUARD® ADVISER’S ALPHA VALUE STACK
Source: Francis M. Kinniry Jr., Colleen M. Jaconetti, Michael A. DiJoseph, Yan Zilbering, and Donald G. Bennyhoff, 2016. Putting a value on your value:
Quantifying Vanguard Advisor’s Alpha®. Valley Forge, Pa.: The Vanguard Group.
BEHAVIOURAL COACHING
TAX EFFICIENCY
REBALANCING
LOW-COST CONSTRUCTIONLOW
HIGH
VA
RIA
BIL
ITY
BE
TW
EE
N C
LIE
NT
S
RULES-BASED LOWHIGH
40 bps
30–40 bps
80–100 bps
150 bps
FOR PROFESSIONAL INVESTOR USE ONLY. NOT FOR PUBLIC DISTRIBUTION.
![Page 56: 17 May 2018 - Amazon Web Services · 17 May 2018 Irish Funds Annual Global Funds Conference 2018. irishfunds.ie ... Morgan Stanley Research; US data through December 31, 2017; Europe](https://reader035.vdocument.in/reader035/viewer/2022070717/5edc4bacad6a402d6666e774/html5/thumbnails/56.jpg)
MOVING UP THE VANGUARD ADVISER’S ALPHA VALUE STACK
BEHAVIOURAL COACHING
TAX EFFICIENCY
REBALANCING
LOW-COST CONSTRUCTIONLOW
HIGH
VA
RIA
BIL
ITY
BE
TW
EE
N C
LIE
NT
S
RULES-BASED LOWHIGH
FOR PROFESSIONAL INVESTOR USE ONLY. NOT FOR PUBLIC DISTRIBUTION.
Source: Francis M. Kinniry Jr., Colleen M. Jaconetti, Michael A. DiJoseph, Yan Zilbering, and Donald G. Bennyhoff, 2016. Putting a value on your value:
Quantifying Vanguard Advisor’s Alpha®. Valley Forge, Pa.: The Vanguard Group.
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A SIGN OF THINGS TO COME
Sources: Vanguard, Cerulli Associates, and the advice firms’ websites. Data are as at 31 December 2016.
0 bps 120 bps40 bps 80 bps
High net worth Mass affluent
Robo-advice
“Traditional”
advice
FOR PROFESSIONAL INVESTOR USE ONLY. NOT FOR PUBLIC DISTRIBUTION.
![Page 58: 17 May 2018 - Amazon Web Services · 17 May 2018 Irish Funds Annual Global Funds Conference 2018. irishfunds.ie ... Morgan Stanley Research; US data through December 31, 2017; Europe](https://reader035.vdocument.in/reader035/viewer/2022070717/5edc4bacad6a402d6666e774/html5/thumbnails/58.jpg)
BEHAVIOURAL COACHING
TAX EFFICIENCY
REBALANCING
LOW-COST CONSTRUCTIONLOW
HIGH
VA
RIA
BIL
ITY
BE
TW
EE
N C
LIE
NT
S
RULES-BASED LOWHIGH
CUSTOM SOLUTIONS
VALUE SHIFTS FROM PORTFOLIOS…TO PEOPLE
FOR PROFESSIONAL INVESTOR USE ONLY. NOT FOR PUBLIC DISTRIBUTION.
Source: Francis M. Kinniry Jr., Colleen M. Jaconetti, Michael A. DiJoseph, Yan Zilbering, and Donald G. Bennyhoff, 2016. Putting a value on your value:
Quantifying Vanguard Advisor’s Alpha®. Valley Forge, Pa.: The Vanguard Group.
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THANK YOU!
![Page 60: 17 May 2018 - Amazon Web Services · 17 May 2018 Irish Funds Annual Global Funds Conference 2018. irishfunds.ie ... Morgan Stanley Research; US data through December 31, 2017; Europe](https://reader035.vdocument.in/reader035/viewer/2022070717/5edc4bacad6a402d6666e774/html5/thumbnails/60.jpg)
Important information
This document is directed at professional investors and should not be distributed to, or relied upon by retail investors.
The opinions expressed in this presentation are those of individual speakers and may not be representative of Vanguard Asset Management, Limited.
The material contained in this document is not to be regarded as an offer to buy or sell or the solicitation of any offer to buy or sell securities in any jurisdiction
where such an offer or solicitation is against the law, or to anyone to whom it is unlawful to make such an offer or solicitation, or if the person making the offer
or solicitation is not qualified to do so. The information in this document does not constitute legal, tax, or investment advice. You must not, therefore, rely on
the content of this document when making any investment decisions.
The value of investments, and the income from them, may fall or rise and investors may get back less than they invested.
Issued by Vanguard Asset Management, Limited, which is authorised and regulated in the UK by the Financial Conduct Authority.
© 2018 Vanguard Asset Management, Limited. All rights reserved.
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irishfunds.ie
Lunch Break kindly sponsored by
![Page 62: 17 May 2018 - Amazon Web Services · 17 May 2018 Irish Funds Annual Global Funds Conference 2018. irishfunds.ie ... Morgan Stanley Research; US data through December 31, 2017; Europe](https://reader035.vdocument.in/reader035/viewer/2022070717/5edc4bacad6a402d6666e774/html5/thumbnails/62.jpg)
irishfunds.ie
Breakout Parallel Sessions
Repeated: 14:20 & 15:00
• Diversity
- (Liffey A- Main Seminar Room)
• Board Governance
- (Liffey Hall 1)
• Digitalisation & Fintech
- (Liffey Hall 2)
• Millennials & Investment Trends
- (Liffey Meeting Room 2)
![Page 63: 17 May 2018 - Amazon Web Services · 17 May 2018 Irish Funds Annual Global Funds Conference 2018. irishfunds.ie ... Morgan Stanley Research; US data through December 31, 2017; Europe](https://reader035.vdocument.in/reader035/viewer/2022070717/5edc4bacad6a402d6666e774/html5/thumbnails/63.jpg)
irishfunds.ie
Panel Discussion: Diversity
Revel Wood, FundRock (Moderator)
Olivia McEvoy, EY
Paul Flynn, Lincoln
Carol Widger, Maples and Calder
Prof. Linda Doyle, Trinity College Dublin
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Female fund managers
Source: Citywire 2017, Alpha Female Report
![Page 65: 17 May 2018 - Amazon Web Services · 17 May 2018 Irish Funds Annual Global Funds Conference 2018. irishfunds.ie ... Morgan Stanley Research; US data through December 31, 2017; Europe](https://reader035.vdocument.in/reader035/viewer/2022070717/5edc4bacad6a402d6666e774/html5/thumbnails/65.jpg)
Share of women among board members of the large
listed companies, EU-28, 2010-2016
Source: European Commission 2016, Database on women and men in decision-making
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Source: European Commission 2016, Database on women and men in decision-making
Gender balance among board members, chairs and CEOs of large
listed companies in the EU
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Board gender diversity
Source: Egon Zehnder, Global Board Diversity Analysis
2016
86%
14%
Board gender balance - Luxembourg
Male Female
Source: ILA/PWC Luxembourg Governance Survey
2016
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Source: CFA Institute Survey
2016
Who values gender diverse investment
teams?
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The road to parity
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irishfunds.ie
Panel Discussion: Board Governance
Dan Morrissey, William Fry (Moderator)
Dr. Margaret Cullen, CIFDI
Daniel Lawlor, AQuest
Enda Roche, Fidelity
Conor Molloy, IFDA
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irishfunds.ie
Panel Discussion: Digitalisation & Fintech
Anne-Marie Bohan, Matheson (Moderator)
Ulrich Koall, TOBAM
Chris Mills, Stradegi Consulting
Keith Fingleton, IDA
Colin Platt, CGP Consulting
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irishfunds.ie
Panel Discussion: Millennials & Investment Trends
Valerie Daunt, Deloitte (Moderator)
Marie-Louse O’Callaghan, Trinity Student Managed Fund
Adrian Mulryan, Marketβeta
Ryan Frater, BlackRock
Dan Hedley, Fidelity
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irishfunds.ie
Coffee Break kindly sponsored by
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irishfunds.ie
An Tánaiste, Mr. Simon Coveney
Minister for Foreign Affairs and Trade
Fine Gael
Government Address
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irishfunds.ie
Panel Discussion: Brexit
Willem Buiter, Citigroup (Moderator)
James Wharton, Hume Brophy
John Looby, KBI
Padraig Sherry, Barings
Lord Dick Newby, Liberal Democrats, House of Lords
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irishfunds.ie
Pat Lardner
Chief Executive
Irish Funds
Closing Remarks
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irishfunds.ie
Premium Sponsors
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irishfunds.ie
Event Partners
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irishfunds.ie
Drinks Reception kindly sponsored by
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81
irishfunds.ie
17 May 2018
Irish Funds Annual Global Funds
Conference 2018
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Gala Dinner kindly co-sponsored by