By: Khaled Sultan
Date: April 28, 2006
Introduction
Today’s investment environment is a challenging one for all of its participants. Things have come a long way since the turn of the past century, and a deeper analysis of the investment industry is required to understand how it will change in the future. The following memorandum aims to discuss the various issues, opportunities and challenges facing portfolio managers of large balanced mutual funds over the next decade. We will begin with a brief description of portfolio management and some historical background on the industry. We will then continue the discussion around the underlying issues. Some of the issues we will put forward are arguably as old as the profession itself, including the fiduciary duty a manager has to her clients. Other issues, on the other hand are expected to gain some light in the upcoming decade, especially issues such as ethical and environmentally friendly investing. We will also address some of the upcoming challenges in this business including the various management and research fees charged to clients by their fund managers, and the degree of transparency of those fees, or lack thereof. Our discourse will also highlight the future investment environment which is expected to continue to be constrained by growing regulation, and compliance burdens. The memorandum will aim to be comprehensive, however much of the discourse will be focused on the major issues expected to gain prominence over the upcoming years.
