Asset Management: The Year That Was

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Acronyms should generally be avoided. But they also happen to sum up the past year in wealth management nicely. Look:


Former prime minister Kwasi KwartenSeptember’s ‘mini’ budget has thrown the UK pension fund market into turmoil. A £45bn unfunded tax relief package has sent yields on government bonds soaring at an unprecedented rate and magnitude, driving debt-driven investments ( LDI) has been shed light on.

LDI strategies typically use derivatives to increase the pension fund’s exposure to gold coins, providing protection against interest rate and inflation movements and freeing up cash to invest in assets that can generate higher returns. . A sharp move in the gold leaf market triggered demands for additional collateral from pension funds, some of which were forced to sell assets to meet their cash demands.

The effects of the LDI disruption are still continuing.of bank of englandThe verdict is that the root cause of the pension fund crisis is poor management of leverage. Pension funds are becoming less leveraged, while their appetite for more liquidity is increasing, both of which have significant implications for asset allocation.LDI provider with BlackRock, Legal and General Investment Management When insight investment, the role of consultants is under renewed scrutiny. Analysts said there could be lawsuits for fraudulent sales in the future. More broadly, this episode provided an early warning of what the future holds as a result of fundamental changes in the structure of the financial system since 2007-2009.


The fastest growing segment in the asset management industry was calculated this year. Russia’s invasion of Ukraine in February has forced companies, investors and governments to grapple with a development that seems to put the E, S and G of environmental, social and governance investments at odds with each other.

European governments have turned their backs on environmental goals by turning to fossil fuels to reduce Russia’s dependence on gas, and for some investors, high oil prices have discouraged investment in fossil fuels. has become a non-negligible advantage. The war ushered in a debate about the social utility of armaments, and banks and investors who had for years refused to support defense companies began to reconsider their position.

Optimists argue that while a war in Ukraine would be painful for the energy transition in the short term, it would accelerate the transition to renewable energy in the long term, which would undermine green ambitions and national security and It is consistent with securing energy sovereignty and asked investors to double their funding. transition.

In the US, ESG has become increasingly political. black rock and its chief executive Larry Fink It was a lightning rod on both sides of the political spectrum. A Republican politician has stepped up his attacks on the world’s largest asset manager over his use of ESG factors in investments, claiming the company is hostile to fossil fuels. Democratic politicians have lashed out at Fink and Blackrock for not doing more to combat climate change, and the UK Activists Fund has called for his resignation on suspicion of “hypocrisy”.

in the meantime Stuart KirkGlobal Head of Responsible Investment HSBC(He was then appointed an investment columnist. financial times.) And the German police raided the office of the asset manager DWS and its majority owner Deutsche Bank This is the first time an asset manager has been raided in an ESG investigation as part of an investigation into greenwashing allegations.

Elsewhere in Europe, top asset managers including Amundi, AXA When NN Investment Partners ESG funds holding tens of billions of dollars in client funds have been downgraded from the highest level of sustainability. This shows how existential questions about what ESG means are compounded by the fact that there is no universal, objective and rigorous regulatory framework for this type of investment. All these dynamics are expected to gain momentum in 2023.

SBF/FTX is SEC/DoJ/CFTC compliant

one year ago Sam Bankman-Fried sat in front of the United States House of Representatives As an acceptable face of crypto.The man, who was hailed in Washington earlier this month for his revolutionary regulatory vision, was due to testify again, but this time to explain why he FTX A cryptocurrency exchange valued at $32 billion in January alone has collapsed. Instead, he was arrested hours before the hearing. His public appearances are currently booked by the court.

The FTX demise has left blue-chip investors, including sequoia, Temasek When Ontario Teacher Pension Plantheir support helped increase the credibility of his business empire, and he was faced with the difficult question of whether they ever understood the business and how they got it wrong.

The demise of FTX caps off a year that includes a well-known asset manager. black rock, Schroeder When Abdoun Even as trading volumes and prices of Bitcoin and other cryptocurrencies plummeted, several major crypto hedge funds, exchanges, lenders and others found new ways to monetize investor interest. Three Arrows Capital, Celsius When block phi collapsed.

ARKK, meet the Fed

If there is one group that has embodied the regime change in the market this year, it is Cathy Woodof Ark Investment ManagementArk’s stellar returns tumbled to heavy losses as a decade of ultra-low interest rates came to an end and the US-led central bank struggled. federal reserve Raise interest rates to combat inflation. Many growth investors like Ark, who have made spectacular profits over the past decade as cheap money flooded the economy, have faced the prospect of rising interest rates, inflation, war and a looming recession. . The name of the former high-handed car, including Ark, Baillie Gifford When chase colemanof tiger globalwas left to lick the wound.

As the private market has not yet fully resolved the issue, some investors Philip Lafonof court management When Gavin Bakerof Atreides Management We have started raising opportunistic funds to finance cash-strapped private companies.


What a terrible year this has been for most investors? The classic mix of 60% equities and 40% bonds has turned toxic. Assumptions about asset allocation have been blown away as the ‘new normal’ takes over. Will 2023 be better? yes?

1 year on the market

10 of our best scoops

10 of our best longer reads

FT and lunch

Howard Marks of Oaktree: “The short term is not the most important thing”

Legendary investor in bargain hunting business, emotional dangers and encounters with drug smugglers

Baillie Gifford’s James Anderson: “The Ides of March will always be there”

China’s entrepreneurial future, and the unlikely star of technology investment in the ‘outliers’ that underpin 19th-century literary comforts

Emmanuel Roman of PIMCO: “The Market is a very complex Impressionist painting”

Renowned literary investor on the art of finding ideas and investing in good times and bad, generational fortunes.

10 top news interviews

good bye

Julian Robertson, 1932-2022 © Pascal Perich/FT

I said goodbye to this year Julian Robertson,Founder tiger management, an investment industry giant known for leading a dynasty of successful hedge fund managers known as the “Tiger Cubs.”read our obituary Here and don’t miss lesson to be learned From Robertson and Tiger.

we also said goodbye Scott MinerdGlobal Chief Investment Officer Guggenheim Partnerswas considered one of great bond investor of the past decades.

And finally

That’s all. thank you for reading. The team wishes you a happy, healthy and prosperous 2023. Send me your travel suggestions my way.And see the newsletter written by Brooke Masters When Lawrence Fletcher in my absence.Harriet

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