Business confidence among the fund management community has risen for the seventh consecutive quarte...
Business confidence among the fund management community has risen for the seventh consecutive quarter reflecting strong increases in both volumes and profitability.
Ranjiv Mann, senior economist at PriceWaterhouse-Coopers, said the continued optimism has been fuelled by strong volume growth and greater efficiency, even though total costs rose over the past quarter.
Mann said recent research into business confidence shows on balance, 30% more fund management firms were optimistic about the overall business situation in the fund management sector than had a negative perception.
That is the highest level since December 1999, when markets were achieving handsome returns for investors.
Mann said well over half of all fund management firms consulted by PriceWaterhouse-Coopers' researchers reported that levels of business over the three months to 6 September were above normal, although slightly fewer believed that it would continue through the current quarter.
Looking forwards to this quarter, fund management companies told researchers they could see greater confidence in overseas retail growth than in the UK where competition remains tight.
Mann said PriceWaterhouseCoopers also found total costs are up across the industry. However, the majority of firms report this has been offset by a rise in profitability, which is expected to continue to rise through the current quarter.
Coupled with confidence in future volume growth, Mann said this has produced a very optimistic climate for business. He said this is reflected in strong capital expenditure growth with over 90% planning some form of IT spend.
In giving reasons for the authorisation of increased capital expenditure spend, Mann said that 100% of fund management companies said that they were investing to improve efficiency, 59% to provide new services, 29% to reach new customers and 75% to increase capacity.
PriceWaterhouseCoopers' res-earchers found that stiff competition in the UK market was the most common factor that was likely to limit business volume growth over the next 12 months.
The availability of professional staff remains a problem and researchers found that over 75% of fund management firms felt that it would hinder their ability to grow their businesses. Mann said many fund management groups see expansion into overseas markets as hampered by legislatory controls and inflexibility of foreign regulators.
Tracking real performance
Diversified return team
The equivalent of £1.7m every day
Janus Henderson Global Dividend index