The Future is “True Alpha” & “Cheap Beta”: McKinsey
| Jan 29th, 2007 | Filed under: Institutional Investing, Portable Alpha & Alpha/Beta Separation | By: Alpha Male |
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“The Asset Management Industry: A Growing Gap Between the Winners and the Also-Rans”
By: McKinsey & Company
Published: 2006
This McKinsey report echoes a theme discussed by Tim Price, the CIO of Global Strategies at UBP. It essentially concludes that is is the best of times and worst of times for asset managers. To back up this argument, McKinsey reports on a survey showing a widening disparity between the most profitable asset managers and the least profitable. Their research shows that, as recently as 2005, there was a 41% difference between the gross margins of the top third and bottom third of asset managers. The report continues:
“Moreover, an increasing proportion of asset managers are now earning margins under 20 percent as the bottom-tier performers fall further behind the rest of the pack. Unless these players move quickly to revamp their business models, the profit gap is almost certain to expand even further.”
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