A New Wave of Innovation in Investment Management

“Unfortunately, there seems to be far more opportunity out there than ability…. We should remember that good fortune often happens when opportunity meets with preparation.”
― Thomas A. Edison

The world of investment management has always evolved rapidly. However, upcoming shifts are of epic proportions. We are currently only witnessing the tip of the iceberg in terms of changes that will impact the profession. Technological and macroeconomic pressures abound. Don’t be left behind. Reinvent yourself or risk being disrupted!

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  1. There’s a new breed of trader on Wall Street, and they’re becoming the new masters of the universe”. “Kings of the universe are no longer the folks wearing suits and going to galas”. “It’s the folks that are crunching Python” “and going to meet-ups”. “Quantamentals” are in high demand – “Quantamental managers combine the bottom-up stock-picking skills of fundamental investors with the use of computing power and big-data sets”.
  2. Machines are rising over managers to pick stocks. “The democratization of information has made it much harder for active management” according to the founder of the largest fund company in the world, BlackRock. Mr. Fink is “now a true believer in systematic investing styles that favor algorithms, science and data-reliant models over the stock picking smarts of individual portfolio managers”.
  3. Why investors may need to lower their sights. McKinsey argues that the past 30 years have been a golden age for companies. Total returns from both stocks and bonds in developed markets are likely to be substantially lower over the next 20 years than they were over the past three decades. Many tailwinds have run their course. Global macroeconomic changes and competition from emerging-market companies and technology-enabled corporations stepping out into new sectors will further pressure incumbents. In my opinion, lower expected returns may contribute to greater allocation of capital to low cost, computer-driven funds and to more illiquid alternatives such as PE, where alpha generation remains relatively more consistently achievable for top performers.
  4. Innovation has the potential to transform the investment industry. Startups are developing proprietary technologies — such as machine vision, deep learning, and other innovations – that could help large investors evaluate opportunities and risks with far greater accuracy and efficiency than was previously possible. Yet the world’s largest funds are closed off from these innovations. Do you have policies in place for monitoring or engaging with startups who are creating next-generation investment technology?
  5. Born the hard way. Even though it happened in the 1850s, the story remains relevant today. Timely given today’s political climate. Most importantly, an inspiring story of a resilient entrepreneur following his dreams and working towards a better future.

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About Ludovic Dumas

Ludovic transforms innovative companies into world-class organizations. He is an investment professional at an investment firm representing the interests of one of the most successful families in Canadian business. Before joining the private equity world, Ludovic was an investment banker at CIBC and with ING Group’s investment banking team in Frankfurt, Germany. Mr. Dumas was also a management consultant with Deloitte where he worked on corporate strategy, restructuring, market analysis, due diligence, and economic development mandates. Specialties Mergers & acquisitions, capital raise, corporate strategy, entrepreneurship.
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