Kathryn Graddy: Thank you for joining us today for this exciting program. Global asset management insights for the post pandemic world. We are all looking forward to a post pandemic world. This is the third event in our multipart trends and asset management series. My name is Katie Graddy and I'm Dean of the Brandeis International Business School and the Fred and reader Richmond distinguished professor and economics. To those of you who are members of our community alumni, faculty, students, staff and friends. I'm so glad you have decided to join us. And for those of you who have an interest in today's talk topic, but are not formally affiliated with Brandeis. It is wonderful to have you with us for this important event, and we hope you remain in touch with our school and university. This series is sponsored by the outposts group and the international business schools Rosenberg Institute of global finance. The Rosenberg Institute is an integral part of our school that was founded and funded by Barbara and Dick Rosenberg is a global business school. We are very proud of our schools long term strength and students and alumni outcomes in the global finance industry. I also want to acknowledge our India initiative, which seeks to build and strengthen ties in India among academic corporate and alumni partners. My sincere thanks to Ruben spits class of '69 a member of our board of advisors for his vision and support of the India initiative. We will be recording this event and sharing it on our various platforms in a few days. Please keep an eye out for it and be sure to share it with your networks. I also want to remind our guests that today is giving Deis day Brandeis is version of giving Tuesday International Day of philanthropy. Your gift to the international business school will make a real difference in the lives of our students. Thanks to the generosity of one of our donors all gifts up to 15,000 to the international business school will be matched today. You can learn more at givingdeisday.brandeis.edu. The link is in the chat. Thank you very much for your support. Finally, I'd like to introduce our moderator for today's program, Professor Dabashi Nandi. He is the Barbara and Richard M. Rosenberg professor of global finance and the director of our India initiative. Thank you Debarshi and please take it away.

Debarshi Nandy: Thank you Dean Graddy, for that introduction. I would also like to welcome everybody to this webinar and we are looking forward to an exciting discussion today. So over the last decade, the asset management industry has faced several challenges. The most prominent likely being the shift from actively managed funds to passive funds over the last several years. This a UN of which has grown to roughly around 11.5 trillion globally. At the end of 2019 beginning of 2020 and this has led to margin compression for the asset management industry. And has likely influenced various industry consolidation and other decisions in the in the recent past. Overtime, one might worry that if such trends persist it might impact the efficiency of financial markets or even the standards of corporate governance and firms. If the largest passive funds end up being the majority stakeholders shareholders in all publicly traded funds these worries might have different implications. On the other hand, during this time the asset management industry has also seen great opportunities as well with the emergence of niche focus areas such as ESP investing climate finance growing opportunities in private markets and other areas. These challenges and opportunities have been impacted by this recent pandemic. We are in the mid south and hopefully coming out of it soon. And while on one hand, it has dramatically sped up innovation and growth through digital channels and, on the other hand, as we stand today the world faces and uncertain economic future with varying rates of expected economic recovery in different countries across the globe. So as countries look to emerge from this global pandemic and associated economic impact, corporate leaders across asset management industry need to adapt to a variety of changes that have impacted global business during this pandemic, as well as political, social, public health realities across the different. So we have three excellent panelists who are joining us today from around the world to discuss these and more issues surrounding how the asset management industry is looking to emerge from this pandemic and it is my pleasure to introduce them to you. I would like to introduce Deborah Bannon was the head of institutional distribution and consultants relations at be NY melon, who is joining us from Hong Kong Deborah. Hello.

Deborah Bannon: Thank you. Hello.

Debarshi Nandy: Hi. Welcome, Deborah.Sanjay Sachdev, who is the former CEO of Tata asset management in India. And currently, the chairman of different holdings, who is joining us from New Delhi in India. Hello, Sanjay, welcome.

Sanjay Sachdev: Hello.

Debarshi Nandy: And Perry Traquina. Now, who is the chair of our asset management board Brandeis is International Business School alum of 78 former CEO and chairman of Wellington asset management in the United States, and currently the director at Morgan Stanley, AllState and Ebay. welcome Perry.

Perry Traquina: Thank you good morning everybody.

Debarshi Nandy: So good morning. Deborah If you could turn on your video. There we go. Great. Thanks. So, I would like to start off by asking each of you each of our panelists. So question on you know what their current talks and interests, our industry management blog. And what you think might be the main geopolitical challenges facing the industry as the world emerges from this pandemic, you know, are there any particular trends that we should look forward to or any issues that we might worry about. Deborah, we could get started with you.

Deborah Bannon: Okay, thank you. And yeah, I mean, in my role as head of institutional distribution for the Asia Pacific region. And you know, I guess. The one thing, obviously I'm covering a lot of us are very diverse client base across very diverse regions, all the way from Australia through to North Asia and Southeast Asia. The one thing that I guess Has been in very interesting for us to consider here is how some of these really large asset owners have gone about. And thinking about the impact of the pandemic on their portfolios. What that means for them in terms of their longer term strategic asset allocation. Does it mean you know the need to reconsider more opportunistic allocations to things that they may not have considered before? So how do they address the issues of being able to do due diligence on new managers in a world where nobody can travel and portfolio managers are unable to visit the Asia region? And so, you know, what we have seen in particular, you know, if you'd have asked me probably back in January, before this really impacted us on a global basis, you know, it was much more risk on environment and it very quickly became much more risk off environment. And asset owners had to very, very quickly Think, and they had to rely on their asset managers or their asset consultants and Of how they were going to protect their Portfolios and then as it's gone on and it's been prolonged I think the thing that we're seeing is that they're realizing the
Traditional diversification in Their portfolios Hasn't really helped them to To a certain degree to protect to Protect on the downside. And obviously, you know, this is a downside that no one could have considered At the beginning of the year was going to happen. And so the impact as some of the larger asset owners, we've seen in the region have certainly taken advantage of that they've taken advantage of the dislocation in markets and They've done very well out of That Others have taken a very hands off approach decided that in the absence of being able to do any Non virtual type of due diligence that they will stick with their existing lineup of investment managers. And so it's really been a bit of a mixed bag. I don't think there's been a particular trend. There's also been Clearly now as, as we've, you know, this is it's been very prolonged we've seen or certainly, you know, from my perspective in terms of the investment firms that we represent in the region, we are seeing more demand for PSG I think it's been heightened or highlighted that it's not only Something that can is for the greater good. It's also something that is a huge risk mitigated in this current environment. So we've definitely seen increase demand from asset owners across the whole of the Asia Pacific region and we are also seeing some of the larger asset owners that are looking at private markets in a different way and increasing their applications to private markets. 

Debarshi Nandy:Thank you Deborah. Perry what are your thoughts on these?

Perry Traquina: You know, I think the pandemic In some ways, hasn't changed several of the trends that were pre existing Coming into Dabashi. You mentioned several of them the shift of passive pressure on fees revenue pressures cost pressures.You know the shift to alternatives privates. You know, these trends were existent prior to March of this year and are likely to persist and in, you know, like other industries the pandemic has probably accelerated certain trends and You know, the ultimate impact on the industry, I think, is still to be seen. But, you know, Deborah mention, you know, a heightened focused on the SGDI by by Institutional investors work from home, you know, how many of those folks will actually go back to the office is unclear, there's an opportunity there to Rationalize expenses. If you're a large asset manager and find ways to be more efficient by shrinking your cost base via real estate. So I think some of those trends are different relative to You know where we were coming into the year, but for the most part, I think the industry faces several sort of structural challenges. It's mature low growth and you know if you were running an asset management company today. I think the trends that you know we're in place coming into the year are still the trends that you need to be focused on over the next five years.

Debarshi Nandy: Thanks. Barry Sanjay from your vantage point, what do you see?

Sanjay Sachdev: But I think that there's a little bit of both, or what Perry said. I think that has clearly been disruption, the pandemic has brought in some element of disruption, but a lot has not changed. These were trends that we're continually prior to the pandemic. If you look at ETF flows, specifically from a passive active to passive first perspective. You know, we're now seeing the ETF industry grow to about 5 trillion in assets. And this this continues to surpass all expectations. So the focus really is from an investor perspective to look at how they can Add access markets at a much more cheaper cost and in a more efficient basis, while having said that, I think that clearly from an asset management industry perspective. This disruption is leading to what you would say is more opportunities in some ways in terms of trying to look out for more more out outside of their, their comfort zone and look at other markets to see how they can expand the scope. So I think this is no disruption can be positive and negative. I think in this case, it looks like it'll probably be a lot more positive over the years to come, in terms of global integration.

Debarshi Nandy: Great. So I want to pick on one of the, you know, one of the ideas that just came about, you know, Deborah, you mentioned about Many, many fund managers, you know, given given the absence of due diligence or the ability to do to do due diligence properly have relied on their past holding In and and you know all their past experience and gone with those that focus. Do you see this impacting performance going forward in time?

Deborah Bannon: Potentially yes if I'm being nice to a certain degree. And part of that is the fact that positive me and I'm speaking purely from what I'm seeing in the Asia Pacific region with the asset owners here and but part of that is that potentially asset allocation decisions that were intended to be made to improve overall portfolio returns over time have not been made. So they haven't changed. They haven't diversified. They've enriched and you know the mandates that they have with existing managers, so it may have caused a little bit of concentration risk there within their portfolios as well.

Debarshi Nandy: Okay, so do you know, Perry. And frankly, I mean free, feel free to jump in at any time. What do you think this might, you know, have an impact in terms of as we look to emerge from this. Do you think there is a greater possibility of active managers coming in to take advantage of the current situation or to build strategies that might You know, The, you know, that might basically be dependent on the emerging economies and the the I guess the, the, what I mean is that the different rates of development on the different rates at which, in the economy's emerge from this pandemic. Are there active strategies that might come up from that perspective but good help the the active management side?

Perry Traquina: You know, my two cents there Debarshi would be that you know the industry is always been pretty innovative you've had many You know industry formation new company formation, new hedge funds. I have continued probably at a slower paced, for the reasons that Deborah outline, which is, it's hard to  do due diligence on a brand new startup when you really can't meet face to face, or your disinclined to meet face to face. But, you know, the industry has always had Formations with people spitting out of their old shop and, you know, creating their own firms and starting a new so I don't think that necessarily has changed. Probably the dynamics around how that actually takes place today has changed because of the pandemic, but I think that will that will continue.

Sanjay Sachdev: So diversity. I think that to some extent phase. Right. Absolutely. But I think that emerging markets by nature of their being are more inefficient so active fund management will probably play a significant role comparatively but having said that you are already seeing an influx of passers and not just passes but but i think more alternatives and quantitative Styles of management. I think this is going to continue for a relatively long period of time. But if you take if you take a much more shorter term view of the of this just this year alone, I think this year has been very, very Devastating for active on managers, because very, very difficult has been made for them to to beat the indexes and I think across the board, not just in the US, but also in emerging markets.

Debarshi Nandy: So we have our first question from the audience. Which brings up the issue of the global supply chain. The risk of which was exposed during the pandemic and whether or not that has what kind of impact might not have on strategies going forward for the US and management industry. So Deborah, do you want to talk about? I mean,  a huge part of the supply chain, I guess, you know, depends on China and goods flowing in and out of China. So what do you, what do you see or what do you think about the situation there that might have an impact?

Deborah Bannon: And yeah, I know. I think, obviously it's highlighted the fact that if you lie on any, any one country  as a key manufacturing center it's it's going to potentially cause some issues and obviously the ongoing US, China tensions have been something that will continue and regardless of, you know, the current pandemic environment. You know, to me, I think if I  was looking now from a perspective of, you know, to actually not reassess supply chains and whether or not You know, you could look to other countries. I mean, what we're seeing in Asia, a lot has been some of the smaller emerging markets that are benefiting from this. So, you know, maybe, countries like Vietnam or Cambodia, etc. Which I don't think is a is a bad thing. And I do think going forward, clearly, you know, China is a force to be reckoned with. And I don't think people will naturally just Not consider whether or not. China is their key manufacturer and whether or not they can trade with the country going forward. But I think there's going to be a bit of fallout in that.

Debarshi Nandy: Thanks Deborah. Perry?

Perry Traquina: Trying to follow up on what Deborah said, I think this is less pandemic, really. But I think the trade tensions and all of the tensions between, say, the US and China have Created a certain level of uncertainty regarding, you know, how do you invest in China there, you know, our company is exposed for, you know, bans or tariffs, we've seen what happened with Tick tock. There's been talk about Heightened audit standards for Chinese companies in the US and whether or not they'll be allowed to actually be listed on the New York Stock Exchange and other exchanges. I think all of that uncertainty is actually bad for markets and so I would hope that some of that under the new administration would be ameliorated so that investors can go back to worrying about fundamentals, as opposed to some of these political Issues global issues that theoretically are could be quite damaging to some of these companies on a go forward basis and we're not talking about small companies were talking about You know, large market cap swathes that could theoretically be impacted by this tension. And so I think that has been exposed here and probably creates a you know risks and uncertainties for investors investing in some of those companies on a go forward basis.

Debarshi Nandy: Great, so up you know one of the things, Perry. I also wanted to touch upon I think What you know both Sanjay and I think all of you have mentioned, actually, that there are opportunities internationally in terms of active management and In, in your view, where do you see the, you know, as we go forward. Where do you see the equilibrium headed towards like Is the trend of, you know, movement from passive active to passive? Is Passive going to dominate going forward, or do you think that you know the the international globalized Or managers would become more international and more globalized, in their view as we go forward?

Perry Traquina: Well, I know the trend that you will get a you just heightened you know the shift to passive. I mean, we're really talking about equities. Active equities versus passive equity. That's where the brunt of this has taken place and I think last year was the first year on record. We're in the US mutual fund industry, the amount of assets in passive ETFs surpassed the amount of equity assets in active fun so That was the first that's likely to persist. The shift will continue. But I think what we're seeing is in addition to that, there's been almost what I would call like a bar belling where Institutional investors are shifting a significant portion of their risk budgets away from active equities say too passive, but at the same time they're shifting That risk budget to private markets. Well that's private equity venture real estate. And all of the idiosyncratic risk that theoretically go with that plus liquidity risks, obviously, because if your money is tied up in a 10 year fund. You expect to get paid for that, because obviously you have less liquidity so that bar belling I think is what we're, what we're seeing and You know, from that. Yes. If all of your business or, you know, you're a whim is in you know us active equities you're fighting against the stream today your only option and even a hard one is to find a way to gain market share within a shrinking pie. But if you're a diversified global manager then there are other areas of opportunity we've talked about, you know, esp investing. We've talked about privates. Wealth creation in Asia is continuing at a pretty high rate. So to the degree that you can access those markets through the efforts of, you know, Sanjay and Deborah. You know, there's a significant opportunity for growth there. So I would say overall it's a mature industry, but within the industry there are, you know, several pockets of growth that You can pursue in order to get above the fray, in order to, you know, produce above average growth and even the largest asset manager globally Blackrock is, you know, look at, you know, the most recent results show that you know even given their size, which is, you know, the largest They have been able to produce organic a UN growth in the mid to high single digits, which is quite extraordinary given their size. So Their opportunities exist, but I think the backdrop is one of maturation. And then, you know, managers needing to find vectors for growth, of which there are several and trying to position yourself in some of those streams of growth.

Debarshi Nandy: So you know that You know, you referred to the potential growth in the In the Asia APAC region and, you know, Deborah and Sanjay, I would like to get your views on this. So, you know, just yesterday, I saw an article in the Financial Times. That mentioned that over the last decade, the number of people with wealth greater than 50 million in Asia PAC has gone up to about 46,000 That same number was about, you know, 15,000 about 10 years ago. And currently, that is greater than that in Europe, which is around 32,000 The US is higher still, to double that around 90,000. But the trend in Asia PAC has been a dramatic growth of, well, what do you see, you know, both in India's South Asia as well as in Southeast Asia and China about you know how this trend is going to continue going forward. Sanjay, perhaps we can start with you.

Sanjay Sachdev: Sitting in New Delhi, I can tell you that as as Indians generate more wealth, there is a much more larger appreciation of the fact that they need to look at more Their asset allocation more from a global perspective rather than just from our Indian perspective. So, you know, the Government of India as has opened up the market. For Indians to invest overseas and with a small little window of about $250,000 per year per person. And we've started seeing You know the started about five years ago. And last year, they had about 22 billion go outside of India in investments, primarily in the US markets. This year that's absurd substantially going to be higher. But, you know, coming back to what you said. I think that, you know, this whole active passive thing. It's not just specifically one against the other, because there's a lot of opportunity for innovation. You know, I mean, who could have thought five years ago that you could invest only in cloud computing, for example. Or you could invest only in an automated automated vehicles or specific sectors, so the growth of thematic investing Is something that catches the eyes of the millennials, a lot more. And I think that's really what's driving things also. The, the ETF business is really a mix is getting more and more into a mix of active rather than passive. So there is a there is a substantial growth. I think one of the fastest growing areas for Blackrock today is the active ETF business actually. And so, so what we are seeing is that, you know, you know, this disruption leads to innovation and I think from a cross border perspective I think specifically in South Asia and Southeast Asia, I'm sure, Deborah probably also can validate the trends, but there is a very big shift in terms of investors wanting to invest more into the US and also the fact that, because of these check trade relationship issues with China, there is a significant opportunity for You know, for us, investors to start looking at diversifying and not just focused largely on China risk alone. So there are opportunities to invest in other markets such as Vietnam, Singapore, Malaysia, India in Southeast Asia.

Debarshi Nandy: Thanks Sanjay. Deborah?

Deborah Bannon: Yeah, I agree with them everything Sanchez just said. I mean, you know, on the subject of obviously the growing wealth and I think that will continue. I think it's a trend that we will see continue for a number of years. I can tell you where the money isn't going though the money's not generally going into passive, you know, The risk appetite of Asian retail or high net worth investors is so much higher And you know where we're seeing a lot of capital flow into now if you look at you know some of the broad rich data for example that's come out over the last year or so. And it will show you that those retail flows are going into higher yielding asset classes and, in particular, into private markets. I mean, the Asians have always owned, you know, always been big into property. Anyway, but definitely on the private market side. And just on the topic that you mentioned before on passive versus active with, you know, I used to be a an investment consultant that massive before I joined BM why Investment consultants for many different reasons do not believe in this trend that passive will ever overtake active for a number of reasons. I certainly don't see that happening in the Asia Pacific region. Not anytime soon. I think there has been a time and a place for it. But if you look at most large institutional asset owners portfolios across the Asia region. It's generally more like a 10 or 15% allocation that they make to passive versus active and you get a few exceptions that kind of skew the numbers. If you look at New Zealand super GPS. And you know people like that, then you're going to, you're going to see that they have a much larger passive book. But I think there's a place for both in the portfolio, but if we, if we go on in a minute. And I'm sure we will talk about things such as the SG that becomes a much, you know, more difficult conversation to have, is how do you fully and effectively implement MSG in a purely passive portfolio.

Debarshi Nandy: I think that's a great segue into talking about climate finance and the rest of it. So there has been a trend out of you have talked about it. So where do you think that there are You know there are opportunities here that that one should or funds are focused on or that funds should look into. Let's also bring up on the table. The definition of yes she, as you know, currently defined Could be you know, it's not the right way to go forward, or do we need to drill down even more. And, you know, really kind of look into it critically. Perry, want to start us off on this?

Perry Traquina: You know, it's a broad umbrella, I guess, so I you know I think you need to try and tease out some of the aspects of that. Let's just focus for example on the G governance part You know, I think, you know, the large institutional owners of assets now are demanding certain principles, guidance, guidelines, policies regarding governance that all publicly traded companies will at some point need to adhere to, or pay attention to. So And, you know, whether that's you know whether board of directors is sufficiently diverse whether you know company is sufficiently diverse in terms of its senior leadership team. You know, Philosophies policies on how do you compensate leadership CEOs whether CEO should be both board chair or and CEO. I mean, these are all you know aspects of governance that you know for many, many years. You know, we're actively discussed Or focused on, but today I think every board room publicly traded company is paying attention to these and making sure that they're doing their best to be on the right side of Of these metrics, with respect to governance, you know, then the other two aspects of yesterday, you know, let's focus on climate environmental I think there's a whole vector there for growth with respect to not only how you do research, how you think about investing What are the risks associated with making investments in certain sectors or certain companies. I think all of this is now getting a much, much greater attention and And then funds will be created and have been created and, you know, large asset managers have created you know groups focused on On on this growth factor. So I think this is just really the beginning and I think it will permeate many of the conversations that investors will have going forward, and it certainly will occupy many conversations that publicly traded companies will have with respect to all of these Metrics because they are now being monitored and evaluated by not just a small group of investors, but increasingly a very large group of investors, including by the way the largest index providers. Who have all created you know views and publish views on on on the SG and expect that they're You know the companies that they now own of which they own significant portions of will adhere to. So I think this is a very important and big trend and one that we should, you know, all be paying attention to.

Debarshi Nandy: Great. So let me also get in an audience question that came in on related to this. You know, China recently opened a bond market for international investors. What is your views on managing risk given You know, with regard to corporate governance regulatory risk and financial reporting of Chinese companies and does the opening also provide an opportunity of Chinese and local investors investing Internationally globally. So Deborah, why don't we go to you, perhaps you can look, you know, give us your views and also and talk a little bit about the China market and what it means for them opening up.

Deborah Bannon:  So just to start with the with the SGI, you know, everything that Paris is some is true. I think, you know, everyone is focus now not purely just on the governance and it used to be yesterday, but a big focus on energy But what coven I think has taught everyone all investors is that there needs to be much more of in focus on the environmental and the societal impacts. And it's companies that are paying attention to those that are obviously going to outperform and manage risk in the long term. So definitely a trend that we see continuing as it relates to the China. Asset man and asset management industry I clean up and things have definitely improved i mean i I've I've been In the asset management industry in one way or another, either as an asset consultant or, you know, in the asset management world out in Asia for the past 25 years and You know, when people first started looking at investing directly into China equity or China bonds. I think there was a lot of concern, especially around governance and, you know, for all the reasons that you know weren't aware of and that being talked about. And I think things have you know as China starters starts to actually become more internationalized and They're looking to seek more investment from overseas they realized that they've had to take note of some of the issues around not only you know ASD and governance in particular, but also what they do on you know CSR, you know, corporate social responsibility and areas such as that and and even to the degree that they're now finally looking at, you know, diversity and in a different way. So I think all of these things. I think it's still take time for some of those issues to really play out. But I think over time obviously no thing will The other side of it is clearly international firms, being able to Operate in China, you know, this year alone in another year. I think if we haven't had an environment like we've had cove it happen. The market opening measures that China has taken this year alone would have, you know, gathered a lot more attention internationally than they have Given this coaching environment. I mean, the measures, they've taken like allowing foreign asset managers to take a majority share in a joint venture up to 100% You know, think things like that you haven't really seen before. But what still hasn't really played out. What we haven't seen is Obviously the China wealth. The retail high net worth investors and what their reaction is to those holy foreign owned enterprises. You know, launching locally domiciled funds and how popular. They are visiting the the locally domiciled funds that, you know, the big Chinese asset management players. I think there's a way to go.

Debarshi Nandy: Okay thanks Deborah.Sanjay What are your thoughts in particular. Also, if you could touch upon from the perspective of Indian financial markets and how he or she is playing out there.

Sanjay Sachdev: Well, you know, I would like to second, a lot of what they talked about, I think that, you know, the focus is really on gender rights and on making sure that there is a separation of responsibilities. And so on. But, but I think that it's it's a little too early. If you asked me, because the even though he has cheese is you know is, is Is very, very, I would say popular right now in the asset management world and everybody's talking about and a lot of articles written on it that this is still working progress because there's a lot of metrics that need to be defined and standardized. So the standards are still not in place yet and i think that you know that you have the principle of principles of responsible investing That the UN Charter, and so on. But, but that's just the beginning. And I think that in countries like India, specifically the g of the SG is extremely critical. I mean, From, from an environmental perspective, India, just last week announced the Indian government announced that they're actually surpassed the Paris accord agreements in terms of meeting those targets. So comparatively even though India had Quite a bit of time to actually enter the Paris accord of us, including China, which was which is just one of these part of it and 2030 but But having said that, I think there's still a lot of work that has to be done on the governance side as far as India is concerned, I think, I think that it's a little too early. The fallacy that remains. And I think that's something that we have to all do something about. Is to remove this fallacy that because you're investing in ESP. That doesn't mean that you're not going to get market related returns You know, because he has he can give you also marketing related returns. So, so his investors should not feel that just because they're looking at trying to do good for society that giving up something Because that's not that's not true.

Debarshi Nandy: Absolutely. So you, it can be financially profitable As well.

Deborah Bannon: Absolutely correct. Yeah, just on that subject. And I think one of the key things that we're seeing. And this is probably on a global perspective is The more focus that goes into as G and you know there is continued focus, both from a retail and an institutional level. And the more challenges the industry is facing because funds that are labeled as G and not necessarily yesterday, you know, there's a little bit greenwashing going on here. And so I think a lot of that will obviously be you know be sorted out over the next six to 12 months, especially as regulators have taken a much more active role now in same know defining the SD parameters and what it means to fund managers across the world.

Sanjay Sachdev: But there are practical practical issues, because if you look at, say, for example, I'll give you one. One example of Korea. There are less than three companies that have that have more than one woman board member as far as Korea is concerned. So, so, you know, it becomes very difficult to find. You know, equal rights, gender rights, you know, those kinds of things in countries like Korea and others. So I think it becomes very difficult for an ESC portfolio manager to find the right businesses to invest

Debarshi Nandy: Perry before I come to you. Let me also, there's an interesting question from one of our audience members. So that touches upon this point about yes G and financial returns and links that to pension fund investments, you know, given that, you know, there are You know, some funds have a sort of like an implied guaranteed or expected return component to it. And the belief or and you know the fallacy Sanjay that you mentioned that he has by investing in years to kind of giving up a portion of your financial expected return Do you think that that might have an impact as well in in patient investors have for potential investors or do you see that happening going forward. Perry, why don't we go back to the you know the the broader question and any thoughts, you might have on the discussion we just had on the Asian markets.

Perry Traquina: As I think Sanjay and Deborah covered that quite well I you know I guess the point I'm making is that You know this trend. I don't think is a fad. I think this is gonna be with us for a while. I, I think it's going to be persistent. I think the expectation surrounding E S g With respect to regulatory bodies, for example, the PRA in the UK is very focused on climate risk. And so all companies will need to be thinking about You know their impact on the environment that is not going to go away and I think increasingly you'll see that in the US as well. Whether that's from the SEC or the Fed. And so I think this is going to be persistent It's unclear whether it has an impact on returns. I mean, we're talking about a very short period of time. I used to say when I was running an asset management firm that the only way to really know if someone can add value or not is over, you know, a decade or two and so You know, this will but you know let's take, you know, fossil fuels. I mean, if If for some reason fossil fuels as a sector and it hasn't been but you know did quite well for a period of time, I would guess that that would be a drag on all yes G invest in an investor returns relative to, say, just a broad index and so But I just think this is going to be persistent and I think all publicly traded companies are going to need to have a have fought this through increasingly and have and they will have to be thoughtful about SG in their companies. And so I think this is going to be part of the fabric of investing for quite some time.

Debarshi Nandy: Great. So, you know, in the interest of time, I wonder, I do want to get in your, you know, I want to ask each of you to perhaps make one prediction or make one what you know what your expectation is about data management industry for the next five to 10 years Any trends that you think should might be coming up and that we should be paying attention to. Sanjay, why don't we start with you.

Sanjay Sachdev: I think that you're in the middle of a  Titanic shift in terms of Of global integration because the future really lies in Asia, in terms of growth rates for the industry. And I think that, on, on the other hand, a Asians. Want to find ways and means of accessing and investing in the US markets. So I think that You'll be able to see a lot more of a mesh and an opportunity for us fund managers for global fund managers to entrench themselves a lot more. And these are very difficult markets and I think very has a lot more experience with that. But to access these markets is not easy and it's not going to be just looking at just institutions because it's really the real, the real juices from it, focusing on high net worth individuals and and the retail market. And I think that the Gen Z in these countries. Gen X Millennials are all very, very aspirational by nature. And and they are looking at what's happening with with global trends. So I think that this is going to lead to a lot more opening of the markets or if you look at You know, the largest customer base of Facebook in the world is not the US it's India. You know, the second largest customer base for Amazon in the world and Amazon invested $25 billion is in India today. And it could have been China, but China has been uploaded market. Right, so, so I think that it's created a certain opportunity because of the mass numbers of Of of people and middle income people and and wealth that is being generated in these markets is going to be a natural fit for for asset management businesses to look at these markets.

Debarshi Nandy: Perry What are your thoughts.

Perry Traquina: You know the one trend that we really haven't talked about Which I think will be much more prevalent over the next five or 10 years is I think the industry is going to consolidate You know, we have a mature industry. And typically what happens with mature industries that you see consolidation the asset management industry remains one of the most fragmented industries, you know, on the planet. And so Given some of the trends that we've talked about, you know, fee pressures cost pressures. You know firms wanting to either expand their geographic footprint or gain access to, you know, new product vectors, whether that's alternatives or something else. I think it's probable that there will be significantly more merger and acquisition activity in the industry over the next five or 10 years, as you know, some of these large firms look to grow look to rationalize you know typically when There is a transaction today. You know, you see a summer between five to 15% synergies realized between the two companies in terms of the entire cost base so I think you know in a in an industry that is going to be lower growth mature, we're talking about, you know, growth rates in the low single digits. And just like we've seen in the you know the banking industry, you know, or the last 20 years There's going to be in, in all likelihood, significantly more consolidation in what is historically been a very fragmented industry.

Debarshi Nandy: Thank you Perry for that insight, Deborah?

Deborah Bannon: It was interesting. The one thing I was gonna say was consolidation. So I absolutely agree with the parents. And, you know, we've seen it already. We've seen quite a lot of consolidation, especially with some of the, you know, the larger firms, I think we're continuing to see My view you know 510 years out, is that there will be two distinctive there will be the large global asset managers that have acquired or merged with with others and just become bigger And have more capabilities and then they'll still probably be a place for the small boutique niche firms that, you know, because I do see obviously Areas such as private markets growing significantly over the next few years. And so some of those smaller private equity firms private credit alternative credit hedge fund shops, maybe will continue to be able to operate on their own right, but the the bigger will just keep getting bigger.

Debarshi Nandy: Right, so, you know, one of the final questions. I think we have a few minutes left. And we have a question from one of our listeners. About the rise in AI ML usage and asset management industry. I guess we did not touch upon it, but I guess there is a huge opportunity there or or is there. I mean, what do you, what do you feel feel about that. Deborah. Do you want to comment on that.

Deborah Bannon: Yeah, I mean I can start from from an agent perspective and obviously being very close to To China and we are seeing that, you know, absolutely you know have to look at the significant right and especially during the coven pandemic environment. And I think it's highlighted even more, you know, the face to face. Contact us has obviously ceased and but people are still looking to invest assets and so Especially in the you know the the retail high net worth market, the use of online wealth platforms fintech, you know, digitalization It's huge. And the Chinese have been one of the best and, you know, early adopters of that technology sort of Alibaba Tencent never seen it with You know subsidiaries of there's like Lou international in Hong Kong and you literally have to just click on your app, you can buy stocks, bonds funds everything you want you know all online. At low fees and and I you know I can see that trend definitely growing. In fact, you know, as a large global asset manager, it's something that we're talking about at BMI melon to see Know what type of technology, we need to be integrating into our process right now, said that we're not left behind, or Barrier partially.

Perry Traquina:  I think you're I think your comment also was sort of The utilization of AI and machine learning, big data in the investment process at least You know that's one. One thing that I've that I've thought about it. And you do see this. I'm not sure it's universal today across all of the large asset managers, but Increasingly, and I know this is true at at at my own shop at Wellington there there's now a pretty large group that's dedicated to this. So you have you know a traditional fundamentally oriented investment teams that are looking at companies and valuations, but they're increasingly being supplemented by inputs either quantitative inputs or You know, big data. Big Data Mining inputs that may at the margin reveal some interesting trends or information that will affect some of your investment decision making. So I to think this is a an important trend on the investment side of the house that Is increasingly taking hold.

Debarshi Nandy: Thank you.

Sanjay Sachdev: I Agree with what Deborah Barry mentioned that I think that it's largely permeated the hedge fund industry and the old area, to a large extent, we will, we're seeing a lot of AI driven quantitative You know, long short strategies we being being marketed around in Asia and South Asia specifically on that, on that basis, but I think it's something that that trend will continue to grow. 

Debarshi Nandy: Great. So thank you everybody. So we are almost out of time, and I would like to thank everyone for joining us as well today. before we close Perhaps you know one of the things that I wanted to, you know, quickly summarize given this discussion and your thoughts is You know there is a lot of ideas that they will be global integration going going forward and consolidation going forward in the acid management industry. Along with increased usage or increased focus on climate science. He has GE and other nice investments in the private markets innovation on natural language processing artificial intelligence and big data applications in the space as well. Very quick reactions from you. So all of this, you know, have you know. Perhaps you know we need one more hour to discuss the impact of what regulation might be on all of these issues, right. Because it has a global integration, you have regulators there consolidation, you have regulators there, you know, use of non standard processes, you have a whole set of regulations, they're  Very quick reactions. What do you think, how should raise our, our regulators reacting to this in real time, or is there a, you know, is that something that needs further thought into and further discussion, Perry?

Perry Traquina: It's a highly regulated industry already You know, whether it's here in the US, you know, the SEC, the Fed But it's also highly regulated in many of the mature markets around the world, Hong Kong, Singapore, Australia, the UK. I mean, it's very highly regulated. I think there'll be new vectors, though for regulation. And for guidelines. And so, you know, I could see that evolving in terms of disclosures regarding yes G and things like that that could be imposed on publicly traded companies. But I think for the most part it's already a highly regulated industry. I know you know many of these large firms have significantly large compliance department legal departments and so I don't think that's, I don't think that's going away and that there will be likely some new vectors for regulation going forward or disclosure that will be required.

Sanjay Sachdev: Well, I would second that I think that the cost of operating an acid mattering business, the largest cost of operating a restaurant business is really the compliance piece now. In fact, the compliance departments and most as as managers businesses is larger than even the back office for that matter, in some cases, or equal to that. So, so I think that Specifically, your question. I think regulators are behind the curve. They'll relatively more reactive and they haven't yet caught up, whether it's with the SG or whether it's with a lot of the trends that you see in total global integration, you know, we did there really isn't A cohesive What you would say regulatory framework out there of weather can you take. Can you take a Japanese fun and say, for example, market that in Singapore today. Okay, you take us fun and market that, you know, and there's a lot of hurdles and there's a lot of regulatory compliance is to be able to do something like that, right.

Deborah Bannon: Yep, absolutely agree. And I think we are definitely in in a highly regulated industry already and we are seeing that on one hand The regulators are starting to step up so you know they're issuing circulars they're issuing guidelines around yesterday around sustainability or labeling your funds sustainable. They're issuing circulars around, you know, for example, you know, electronic data storage and things like that that we we probably didn't have, you know, several years ago and but on the other hand, I agree with Sanjay, sometimes there is a bit more reactive rather than proactive.

Debarshi Nandy: Well, thank you for joining us and thanks everybody else for joining us this morning. We will be sending out a short two minute survey following this event and your feedback will is important to us and will help us improve these in person, you know, virtual as well as hopefully in the future in person events as we continue. Have a great day. And good morning and good evening to everyone. Thank you.

Deborah Bannon: Thank you.