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The London Asset Management Market

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Abstract

This paper provides an appraisal of how London has become the world ís largest market for asset management and evaluates whether it possesses the attributes necessary to sustain success in the future. We find that most of the growth in the London market has come from the institutional asset management business. The institutional market will continue to be an integral part of London ís asset base, although the high-net-worth market should also be viewed as a major source of funds. Other growth markets include high-yield bonds and alternative investments. To continue to attract investments, London-based institutions need to recognize that power has shifted from the sell-side to the buy-side. This power shift is increasing competition and thus lowering fees. To remain competitive, London-based institutions should consider outsourcing non-core functions to allow them to focus solely on the management of assets. They should find new sources of return and improve their operations so that they extract every last possible basis point. The findings of our study indicate that, contrary to what many had believed, the increased number of U.S. asset management firms in London has been very beneficial. Through the U.S. firms, London-based institutions have gained knowledge of the latest asset management skills and styles. As a result, they are well positioned to dominate the four key growth areas: specialist management, European credit markets, alternative investments, and high-net-worth individuals.

Suggested Citation

  • Shojai, Shahin, 2001. "The London Asset Management Market," Journal of Financial Transformation, Capco Institute, vol. 2, pages 93-105.
  • Handle: RePEc:ris:jofitr:0005
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    Keywords

    Asset Management; financial competition;

    JEL classification:

    • G11 - Financial Economics - - General Financial Markets - - - Portfolio Choice; Investment Decisions
    • G24 - Financial Economics - - Financial Institutions and Services - - - Investment Banking; Venture Capital; Brokerage

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