Davos WEF
Davos WEF

This is the year for active management to prove itself: Allianz CEO

QE has meant all assets go up at once: Aberdeen CEO

The active asset management industry needs to prove its value, the head of the world's third-largest insurance company told CNBC in a panel at the World Economic Forum in Davos on Tuesday.

"It's too simple to say that it's the end of active management and everything is going to be passive. ... It's going to be a great year to prove our value," said Oliver Bäte, Allianz's chief executive, acknowledging that investors were looking to asset managers to demonstrate they have more skin in the game.

Fellow panelist, and CEO of Aberdeen Asset Management, Sir Martin Gilbert agreed that fund managers should find more opportunities to distinguish themselves due to the expected end of the aggressive quantitative easing pursued by central banks since the financial crisis.

"As we see a reversal of that, we should get back to more stock-picking and active should come through — it's had a tough time over the last seven or eight years," he said.

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While Gilbert admitted that the extreme efficiency of the U.S. large-cap markets would continue to present challenges to active managers seeking to gain a competitive edge, he also affirmed that he believed "stock picking in small-cap and mid-cap in the U.S. is a great area to be."

Referring to the tendency for companies in recent years to favor returning money to shareholders via buybacks and dividends over making long-term investments, fellow panelist Anne Richards, CEO of M&G Investments, said that she saw this trend drawing to an end as investors came to demand more sustainable deployments of cash.

"Stocks that have a story that is more than simplistically stability of earnings or stability of dividends in particular will get a little bit of a better reception from the market that is looking for fresh ideas," Richards suggested.

Acknowledging the raft of poor press and regulatory attention asset managers have received in recent years, combined with returns that have underwhelmed relative to selected benchmarks, Richards noted money managers have their work cut out to regain the esteem of their customers.

"The onus is on the industry, on active managers as well as passive managers," she added, in a point echoed by Gilbert.

"We've got to win back the trust of our clients," he said.

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