The head of Merrill Lynchs (ML) EMEA Portfolio Management division Simon Miles predicts the differentiation between active and passive wealth managers will increase in 2011 as the investment space returns to a more normal investment climate.
London-based Miles told PBI active managers that seek out investment opportunities will be able to demonstrate a superior performance to passive managers.
Now, because things are starting to settle down, the ability of managers to identify a good company versus a bad company is going to start to emerge, he said.
The tough investment climate since 2008 has spurred the take-up of passive investments, such as exchange traded funds, at the expense of active money managers.
ML ups its risk levels
Miles said ML has steadily increased its risk levels over the past six months, following its prediction last summer that investors would not see a double-dip recession.
The big hunt is for yield, but there is no silver bullet. Our view is not positive on sovereign bonds, but reasonably positive on equity markets that can give you good dividends, said Miles.
We are cautiously optimistic about investment markets in 2011 and 2012, he added. You will continue to see volatility, but there are good opportunities in equity markets. Companies in markets around the world have a reasonable amount of cash and that will help support equity markets.
Strategic push outside US borders
ML has around 40 portfolio managers based in Switzerland, the UK and Jersey, France, Italy and Spain, with a global offering dealing with clients outside the US.
Over the past six months, Merrill Lynch Wealth Management has made a number of significant hires, including former Neos Capital fund manager Tom Wicks, as it focuses on the potential growth possibilities outside the US.
Tapping Asias growing wealth base is part of this strategy.
We have a good client base in Asia and there are opportunities to grow that further. That is one of our strategies for 2011 and beyond. Asia is where the wealth is being created so that is where the opportunities lie.