Axioma: Five Trends for Asset Managers in 2017 as Europe Takes Centre Stage

2016 seemed to be the year in which politics overtook economics as the major driver of markets, at least in the second half. The year started with a sharp downturn in equity markets driven by concerns about China and tumbling oil prices, but that decline - and the resulting increase in volatility -- reversed quickly. It was not actually until June that the importance of the political landscape arose: we saw the unexpected outcome of the UK referendum, the looming Italian constitutional crisis, and the US Presidential election. 2017 promises to bring more of the same. With elections in France, Germany, and the Netherlands, 2017 will see the theme of political instability continue to play out, with Europe taking centre stage again.

Key relationships between markets also shifted late in the year. Changes in bond yields became less correlated with equity market returns, currencies, especially the pound and euro, uncoupled from equity markets, and equity markets became somewhat less correlated with each other. As a result, we expect asset managers to step up their utilization of sophisticated risk models to home in on these changing asset class dynamics and portfolio correlation risks, as well as their underlying volatility, in their quest to preserve and improve performance.

Against this backdrop, we foresee five trends which can shape the European asset management landscape in 2017. Click here to read the rest of the article.

Ian Webster

Ian Webster is responsible for Axioma's overall business operations. In addition, Ian oversees Axioma's program management and strategic initiatives. Prior to joining Axioma in 2011, Ian was the Vice President of Data Strategy at Barra, Global Head of Market Data at BGI, and a senior member of the middle office team at UBS Global Asset Management.

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