PRINT THIS PAGE Beyond the credit crisis: the impact and lessons learnt for investment managers29/07/2008. Source: KPMG . 
 Since the summer of 2007, banks have suffered significant losses as a result of one of the biggest crises ever to hit the financial services sector, the so-called credit crisis. So far, banks have been the focus of attention as bearing the brunt of the credit crisis impact. But what of the fund management sector? This report from KPMG asks how fund managers have been affected by the credit crisis – and what strategies they are adopting in response.
Some of the key findings within the report include:
Investors do not have the same enthusiasm for complex instruments as fund managers. Increasing complexity defines the fund management industry today. This survey of fund management and investment professionals reveals that 57 percent of mainstream fund management firms use derivatives in their portfolios. The figure is even higher within large mainstream fund management firms: nearly one-third of those with assets of at least US$10billion use derivatives to a major extent. Even more fund managers (61 percent) now manage hedge fund strategies, which in many instances are complex. The survey also found that half of mainstream fund management firms manage private equity strategies, nearly half manage asset-backed securities and more than one-third manage collateralized debt obligations (CDOs). Fund managers still believe that with the exception of CDOs, all the above strategies and asset classes will rise over the next two years. On the other hand, 70 percent of the investors who answered the survey say that the credit crisis has reduced their appetite for complex products.
Trust in fund managers has fallen as a result of the credit crisis. Fund management firms have suffered a degree of fallout from the credit crisis, although nothing nearly as severe as the banking sector. Well over half of mainstream fund managers say investment returns have fallen and about the same proportion report falling subscriptions. But the damage potentially goes further than short-term losses in funds: six out of ten respondents believe trust in fund managers has been eroded due to the effects of the credit crisis.
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KPMG the audit, tax and advisory firm is the US member firm of KPMG International. KPMG International's member firms have 123,000 professionals, including more than 7,100 partners, in 145 countries. For more information go to www.us.kpmg.com.
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