Schroder: "Global Asset Management Industry Expands Investment in Risk and Private Assets"

Schroder Investment Management to Host '2024 Global Asset Management Industry Trends and ESG Trends Seminar' on the 21st

Schroder Investment Management held the ‘2024 Global Asset Management Industry Trends and ESG Trends Seminar’ on the 21st at the Conrad Hotel in Yeouido, Seoul.

Eunsoo, CEO of Schroder Investment Management Korea, delivering a greeting at the "2024 Schroder Investment Management Global Asset Management Industry Trends and ESG Trends Seminar" held on the morning of the 21st at the Conrad Hotel in Yeouido, Seoul. Photo by Hyunseok Yoo

Speakers at the event included Katherine Cox, Head of Schroder Global Institutional Business, and Mervyn Tang, Head of Schroder APAC Sustainability. They shared Schroder Group’s views on global asset classes and sustainable investing, as well as trends in shareholder activism in the Korean market.

First, Cox evaluated that the asset management industry is moving toward portfolio diversification. According to Boston Consulting Group (BCG), asset managers expanded their fund portfolios during the bull market from 2012 to 2022. However, recently there has been a growing need to focus on sustainable and profitable businesses that can create stronger value.

Cox explained, "The asset management industry recognizes the need for significant change due to rising costs and increasing fee pressure. To address this, it is necessary to optimize costs innovatively rather than simply cutting expenses."

In response to this need, the assets under management (AUM) for alternative investments are gradually expanding. Alternative investments have emerged as an option for portfolio diversification as traditional asset classes such as stocks and bonds have shown vulnerability amid inflation. As of the end of 2022, the global AUM for alternative investments exceeded $20 trillion, increasing by 10 percentage points compared to 2005.

Catherine Cox Schroder, Head of Global Institutional Investment, is seen presenting on global asset management industry trends and Schroder's strategies at the '2024 Schroder Investment Management Global Asset Management Industry Trends and ESG Trends Seminar' held on the 21st at the Conrad Hotel in Yeouido, Seoul. Photo by Hyunseok Yoo

Regarding investment trends, Cox said, "Investors increased cash holdings during the rate hike period in 2023, but as interest rates have peaked this year and expectations for rate cuts have grown, interest in risk assets is returning. However, since it seems difficult to return to the previous low-interest-rate environment, the preference for asset classes like bonds is expected to continue."

Additionally, with the popularization of private assets, the innovative growth of semi-liquid and evergreen alternative investments is expected to improve liquidity management convenience when investing in alternative assets.

Schroder Group was the first in the industry to introduce the Stewardship Code, a key element in ESG (Environmental, Social, and Governance), in 2010 and has been actively engaged in shareholder activism. According to Schroder Group’s 2023 global voting activities, active engagement was conducted in themes such as climate change (38%), human capital management (26%), and governance (15%).

Marvin Tang Schroeder, Head of Sustainability for the Asia-Pacific (APAC) region, is seen attending the "2024 Global Asset Management Industry Trends and ESG Trends Seminar" held on the 21st at the Conrad Hotel in Yeouido, Seoul, presenting an analysis and trends of the Korean market in line with global ESG trends. Photo by Hyunseok Yoo

Regarding Schroder’s investment philosophy of ‘sustainability,’ Tang emphasized, "Schroder Group’s fund managers and analysts consider ESG factors separately from traditional financial analysis during the investment process."

With the strengthening of global ESG regulations, the number of companies setting climate targets and shareholder proposals related to climate goals is increasing. According to Morgan Stanley Capital International (MSCI), the proportion of companies setting climate targets rose from 24% in 2015 to 54% in 2023 globally, while in Korea it increased from 15% to 33% during the same period, more than doubling. The number of shareholder proposals received by domestic listed companies also approximately doubled from 2018 to 2023.

Regarding market concerns about sustainable funds, Tang responded, "Although the inflow of funds into sustainable funds has slowed, they have shown relatively strong resilience. The performance of sustainable funds is as diverse as that of traditional asset funds."

In particular, the market share of climate funds is steadily expanding, with a larger asset proportion in the Asia-Pacific region. Tang stated, "Climate transition is the fastest-growing category, and in the Asia-Pacific region, climate solutions and clean energy stand out as prominent categories."

Jung Eun-su, CEO of Schroder Investment Management Korea, emphasized, "Schroder Group focuses on sustainable growth to maximize investors’ benefits. Schroder Group and its Korean subsidiary, Schroder Investment Management Korea, plan to lead the expansion of private assets in the Korean market in line with these global trends based on their expertise."