Where are we today?
The main trends and facts about the Asset Management industry today
As expected, the Covid19 pandemic has had a negative impact on Malta's economic growth, with the Central Bank of Malta estimating Malta's GDP to have contracted by 7.5% in 2020. In the context of Malta’s asset and wealth industry in Malta, no one has been immune to recent market volatility with drops in the MSE index of over 10% in 2020. Having said that, we have not seen the major sell-offs one could expect in such an unsettled time, trading activity varied from investors actively trying to exit the market, with others seeing a time of opportunity. The current local landscape has also been heavily impacted by the MFSA’s drive to increase its supervisory activity looking to raise the bar in terms of compliance across all regulated industries including investment firms and funds.
What are we learning from this crisis?
The realities of an unprecedented event at the scale of the pandemic and the huge compliance pressures arising from the local regulatory landscape, are pushing local asset management operators to refocus and rethink their way of working and meeting changing client's expectations. In challenging and uncertain times, many investors tend to be more cautious while others will be keen to spot opportunities. What can be considered the first economic slowdown in a while in Malta, is pushing retail investors to feel the need to diversify and generally pay more attention to their portfolios, while some professional investors are possibly seeking certain speculative positions, including in alternative assets. Furthermore, it seems like 'normality' will only be returning in a very gradual way and at a different pace in different sectors and in different locations.This may lead to investors taking a more deliberate and introspective approach for longer, demanding a more personalised investment strategy. In parallel, local operators have had no choice but to focus on ramping up their compliance culture as they deal with regulatory pressure, some looking to take the opportunity to refocus and build a more efficient and tech driven infrastructure.
How do we respond?
While the vaccine roll-outs are giving us all hope, the short-term will remain characterised by economic uncertainty. The Asset and Wealth Management sector has so far emerged from this pandemic relatively unscathed as compared to other industries, and now it remains to be seen whether firms will quickly adapt to the fast-changing market conditions and maximise any potential opportunities in 2021 and beyond. So this remains a time of opportunity for operators to refocus and ensure they are in the best possible position when the recovery happens. Many are looking to recalibrate to a more client centric approach offering more tailored interaction. Looking at ways in which technology can help achieve this in a feasible manner will be key. Furthemore, while it is difficult to gauge how quickly local investors will follow their European counterparts, interest in sustainable investing and paying more attention to the ESG impact of strategies, is increasing. As opportunities in terms of ‘impact investing’ increase, it is simply a matter of time until this becomes a reality locally. This in line with a possible move to more deliberate and diversified post pandemic strategies and operators would do well to be ahead of the curve in this area.
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