The investment industry has several challenges ahead, but there are also many growth opportunities, particularly in sectors like sustainable real assets and impact, says Tony Dalwood.
PI: The asset management sector has changed a great deal since you started your career at Phillips & Drew. What, to you, has been the biggest change?
The global shift into alternative assets has been significant. They are playing a far larger role in asset allocation for wealthy investors, pension schemes and family offices who want income to help generate returns and achieve their objectives. Active and engaged public market investing - including techniques used in private equity - are also more popular as investors seek truly active equity investing and not index hugging managers.
There has also been an increased focus on regulation, including the development of cost transparency through MiFID II. One of the likely implications of the framework could involve the development of significant opportunities for growth capital providers because they use their own detailed research techniques, rather than relying on stock broker input, and perform proprietary due diligence prior to investing in small quoted UK businesses.
PI: What will be the biggest challenge for asset owners over the next decade?
A key challenge will involve difficulties likely to be faced by final salary pension schemes in their purchase of traditional bond and equity assets at inflated prices, and failing to meet their long-term inflation-linked targets, as a result. The challenge is becoming all the greater as stock market volatility has structurally increased with the market’s tendency to put more emphasis on short-term returns.
PI: What is the most exciting trend or development that you are seeing in your markets?
We are seeing a growing interest among investors for impact investments that achieve social and environmental good, as well as healthy financial returns. We believe there is a substantial growth opportunity in sustainable real assets, particularly for renewables and clean energy.
PI: What keeps you up at night?
Thinking about keeping clients happy. Gresham House shareholder value will only increase as long as we continue to achieve this.
PI: Something we don’t know about you?
I used to play a lot of rugby to a good standard, playing junior international rugby and receiving a Blue at Twickenham for Cambridge against Oxford.
PI: If I wasn’t working in investment management, I would be a….
I did wonder, early on, whether teaching economics and sport would be a game plan. But it never really got beyond a few voluntary days at a school and ultimately, I did not pursue it as an alternative to an investment career.
Tony Dalwood is Chief Executive Officer of Gresham House
