Many attendees, myself included, awoke after last year’s Annual Conference to a headache caused by more than that last drink at The Whiskey Bar in the hotel the night before.
I went to bed, confident for a remain vote win in the Brexit Referendum given the exit polls. That didn’t quite work out as forecast and you’d be forgiven for thinking 2016 couldn’t get any worse (you’d have been wrong!).
Today, I’m experimenting with writing a detailed report on what’s discussed at this year's event.
Having attended, exhibited and participated in a panel at the Annual Conference over the last few years I’ve always found the content to be excellent and deserving of a wider audience.
This is my effort to document and share any insights I can glean from todays talented speakers. Hopefully, a useful summary for anyone who attended and an interesting record for those that could not make it in person.
I'd the pleasure of sitting down for dinner with Tara, incoming chair person at Irish Funds, at a recent Cork Financial Services Forum dinner. Tara’s enthusiasm for the role was infectious and I look forward to seeing the initiatives she’s leads in the coming year.
Tara, if you are reading, a Fintech membership option to join Irish Funds would be warmly received :)
It's been an exciting week for Tara. As well as addressing todays audience she was also named in The Hedge Fund Journal’s latest biennial 50 Leading Women in Hedge Funds report, sponsored by EY. A deserved honour on a global list of the top names in Funds.
'Connecting people in a digital world' was the main theme of the address and is something we do particularly well in Ireland.
Tara also outlined some of the interesting panels scheduled throughout the day.
Someone has been getting Mandarin lessons as Tara gave what I can only assume was a fluent overview of our Chinese guests speaking about China later this afternoon.
I’ve witnessed Enda Kenny speak live on a couple of occasions and he never fails to captivate the room. A bit like U2, he’s a band best seen live and this morning is no different. I feel lucky to be here to see one of his final performances in the role of Taoiseach.
An Taoiseach began his address by warmly greeting the first funds delegation we’ve had in Ireland from China.
He also reminded the audience that Ireland is the fastest growing economy in European union for 4th year in a row.
Also covered was Ireland’s benefit gained through European membership which linked in well to also discussing our links to Brittan historically and how those links should be maintained post Brexit.
'A referendum is a good opportunity for an electorate to give a government a good lashing'. You can take the man out of Mayo...
An Taoiseach noted that Ireland is a location for specialised financial services driven by technology, talent and innovation.
As at the end of 2016 Ireland had €4 trillion Assets under Administration.
Also noted were some upcoming Law reform to make Ireland more attractive for Private Equity Funds and the success to date of the European Financial Forum which will return to Dublin Castle on 31st January 2018.
Finished with asking for a "spirit of partnership" facing the challenge of Brexit.
You should always try to leave an audience laughing and the recount of a text from the Former Prime Minister of Finland on news of stepping down after 42 years of public service raised a few laughs - 'Welcome to Freedom!'.
Moderator: Kieran Fox, Irish Funds
Panellists: Deirdre O’Connor; Samantha McConnell, Willis Towers Watson; Robert Rosenberg, Heptagon Capital; Steve O’Hanlon, Rubrics
Kieran started with asking the panel for some key trends they've been seeing.
It was noted that it has been a challenging year for economic, geopolitical and regulation related reasons.
Not surprisingly there was a pitch for less regulation which was seen as having swung too far.
Regulation underscored how manual this Industry is. Middle office is extremely manual. Huge opportunity to tackle this.
There was a recognition of the cost issues expressed by Investors recently and how they have a valid point. Sounds like people are starting to listen to Warren Buffet.
The panel expected to see a continuing trend of small funds merging with larger funds.
Another point was that the current bull market has been unwritten by Centrals Banks.
The first Audience poll of the day - what are the greatest risks?:
Overwhelming vote for Geopolitical (77%) over end of QE, FX volatility and inflation.
Some coverage was given to the complications caused by young people demanding FX hedging when it comes to their investments. One manager on the panel noted that they are launching funds with an average of 40 share classes to hedge FX risk, increasing complexity and risk.
Time of big change. Winners will be those who execute on technology, outsourcing and governance to reduce cost.
Outsourcing improving. Consolidation getting bedded in terms of systems.
Pressure on Administrators to invest in technology - still very manual process.
Increased focus on fee transparency with pressure on fee compression.
Relentless demand for lower fees, particularly in a low return environment.
Transparency is a good thing but too much focus by Investors on fees without enough attention on investment returns.
Regulators in the UK steering investors towards lower fee funds – does that create a risk?
Passive vs active moving in cycles.
As an Industry we’ve been pure useless as efficient deployment of capital
Big themes over next 10 years:
Consolidation, outsourcing, technology. Big players going to change.
Moderator: Andrew Dyson, ISLA
Panellists: Craig Starble, eSecLending; Stephen Kiely, BNY Mellon; Maurice Leo, Deutsche Bank; Karl Bishti, Credit Suisse
The pendulum is gone too far with regulation mentioned again. The regulators get their right to reply later.
Not a normal panel for this type of event.
Stock lending has become much more transparent.
Clients coming for Alpha generation (low interest period). Anything to help rise above a benchmark or to offset costs.
Securities lending plays an important role in liquidity.
Extra performance gained from securities lending (e.g. getting above a benchmark) could be the difference between a manager being hired or fired.
Active engagement with a securities lender vs passive can be enough to outperform competitors that are passive. Engagement important to get the most from the relationship.
Fixed income coming to the fore due to regulation.
Regulation can be frustrating but can provide opportunities.
Does the panel see the demand for ETF’s in the US going to be repeated in Europe? No is the short answer. May not be as much demand driven volatility in Europe.
Regulation moving to market conduct. Making sure market participants are adhering to the regulations created during this cycle.
Moderator: Ted McGrath, William Fry
Panellists: Craig Hughes, PwC; Brian Moran, Hines; Alan Synnott, BlackRock; Alison Manley, Goodbody Fund Management Ltd
Sector provides massive opportunity. Mismatch in supply and demand.
Bridging the divide between global capital and local opportunities.
Valued at all-time highs but providing an attractive yield.
Opportunity to facilitate available capital with access to real assets.
Often used for medium to long term investments.
Investors don’t care about structures used for Real Assets. Care about tax efficiency, certainty, cost effectiveness, transparency and easy to understand.
Data suggests maybe we’re breaking out of the low interest, low growth period.
On the other hand, retail data is ‘meh’ – there’s always an on the other hand with economists.
In eurozone the surveys are positive but hard data is trending down. The constant pull between perception and reality.
Does the business cycle of 10 years from boom to bust exist any more, perhaps but a lot longer than it used to be?
Oversupply of regulation and macro liquidity since financial crisis. Will be a drag on growth.
Most economic equations based on scarcity not over supply.
Hasn’t been much productivity growth in the developed world which will restrict GDP growth.
One way to boost productivity is through technology innovation which leads to oversupply of labour.
Aging population drags on growth. Shifts investments to more risk averse.
Drop in labour force participation rate.
Secular stagnation which means 2% GDP growth for US and 1.5% for Europe, potentially for years to come.
Lots of policy uncertainty in the US makes it hard to forecast.
China been quiet for the last 9 months. Investors may get complacent. That may change as stimulus measures are withdrawn.
Moderator: Pete Townsend, Norio Ventures
Panellists: Dr. Vincent Power, A&L Goodbody; John McGrane, The British Irish Chamber of Commerce; Jeremy Soutter, Standard Life; Megan Greene, John Hancock Asset Management
Pete started by asking the panel for their opinion on how the Brexit negotiations would go. ‘Long, late, tetchy and tempestuous!’ was the response from Dr. Vincent Power.
Vincent compare EU membership to the following which the audience enjoyed 'Like a lobster pot, easy to get in but difficult to get out alive'.
The Brexit panel seems to have been the highlight of the day based on my conversations with other attendees.
Dublin to London is the second busiest air route in the world. Biggest food customers of each other.
UK economy so far has held up well, although early days. Most economists forecasted recession.
Data just starting to turn negative.
Deals to buy UK companies went off the table due to regulatory uncertainty post Brexit.
Potential for EU leaders to play hard with UK to defend against domestic populist parties rather than make an example of UK.
Audience poll: Will Ireland be better off 10 years after Brexit – Yes 66%.
Asset Management not affected by Brexit – not strictly true.
Could Brexit get reversed? Maybe 20% chance and a Bobby Ewing from Dallas reference.
Audience poll: Will EU be better off or worse off post-Brexit? 59% say worse off.
Would Scotland be better off in the EU along with Ireland?
Article 49 would be required with Scotland as an Independent country before applying for EU membership.
Northern Ireland most economically vulnerable to a hard Brexit.
Could low Oil prices keep Scotland in the UK? Brexit has impacted inflation which is 3%.
Pound could weaken on tough negotiations on a hard Brexit
Audience poll: In 10 years’ time, will other Member states follow UK out of EU. 52% yes, strangely close to referendum result.
Positives. Not the worst crisis of the EU.
Moderator: Sheenagh Gordon Hart, Fund Radar
Panellists: Jim Reese, SEC; Antonio Barattelli, ESMA; Grainne McEvoy, Central Bank of Ireland
Message from earlier speakers acknowledged - too much regulation.
Capital Markets Union – weakened now with Brexit but still important initiative.
Nobody knows what impact Brexit will ultimately have on CMU.
In the US interaction with Investors is becoming more technology interfaced than human.
Changing the landscape of the market. Importance of an Investor education unit at the Regulator.
Trump, will there be a big roll back? Report on Dodd Frank review due during the summer.
What will the recommendations be? We will see.
What’s happening to all the regulatory data being collected?
Priority is to ensure quality. How can it be used to influence decisions at a policy level.
Irish Central Bank will be doing work on Outsourcing this year.
Introduction: Eoghan Murphy, Minister of State with special responsibility for Financial Services, eGovernment and Public Procedure
Outlook for China’s Macro Economy, Chao JIANG, Haitong Securities
Overview of China’s Capital Market, Jane YUAN, Haitong Securities
Panel Discussion: Investment Opportunities in China’s Capital Market Moderator: Chao JIANG, Haitong Securities
Panellists: Can ZHU, China Asset Management Co.; Hao LUO, China Southern Asset Management Co.; Qian ZHANG, GF Fund Management Co.
Pat Lardner introduces the China segment in the absence of Eoghan Murphy TD.
A lot of work has been done by Irish Funds to build a connection between China and Ireland.
Ireland: A Guidebook for Chinese Asset Managers – published today.
Presentation on the Chinese economy
Lots of detailed information, way above my pay grade. Will try to post link to presentation here if available.
Moderator: Jim Firn
Panellists: Cora Gibbons, Barings Asset Management; Barbara Wall, Cerulli; Jaspal Sagger, Legg Mason
Brexit likely to have a big impact on distribution in Asset Management.
Audience poll most significant challenge for product distribution in the next 3 years? Regulation 43%
Poll of MiFID II impact on 3rd party sales. Only 4% thought the impact would be significant.
Will need to look at alternative distribution such as robo advice – b2c.
Increase of outsourcing in the infrastructure space, real estate and debt.
Challenge for distribution houses will be the political landscape both in Europe and around the world.
Trend towards protectionism. Contagion effect to Asia, Italy.
What does it mean for UCITS?
Increasing challenges to sell products across border.
How to develop products in a fee compression period?
One solution is to focus on choice of products and high quality. Must be more cost effective and efficient.
Technology to help end customers get better advice, reduce cost and help with regulatory compliance.
Can’t expect all investors to become sophisticated. How does the Industry make it simple for everyone to invest money?
Moderator: James Pomeroy, HSBC
Panellists: Brian Kennedy, Davy; Pervaiz Panjwani, Cit; Chris Horn, Atlantic Bridge; Bob Kneip, KNEIP
Audience poll: Do you think of yourself as millennial? No 75%
The definition is called out as anyone borne early 1980s. I’ll take that.
Socially responsible investing has evolved away from what you shouldn’t invest into towards much more sophisticated data analysis.
How a management team manage its governance and environmental responsibilities can be a good indicator of management quality.
Bob Kneip says Fintech is more of a cultural thing than a technology thing. I agree with that.
Millennials aren’t interested in assets. They want experiences. - Chris Horn.
How can businesses attract and keep millennials?
Lots of active reference, social media and pitching a dream.
Audience questions: What part of the funds industry couldn’t be replaced by technology? No concrete answers forthcoming on that one.
Audience questions: Are millennials investing in the market? Hard to tell.
Perhaps regulation drives innovation for Fintech and the opposing view that it restricts innovation.
Bob Kneip talks about his internal accelerator. Disruption from the inside.
Damn, literally last question brings up Blockchain. Almost got away with it.
Pat reviewed todays topics and made a call for collaboration in relation to Brexit.
Ireland in a good place to influence positively.
Pat noted the contribution of the Chinese delegation to the confernce.
Summed up Distribution, Fintech, Diversity panels by saying it is all about adaptability.
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