The last several years have brought about change at a scale and pace once seemingly unimaginable across the US economy. For asset managers specifically, 2024 begins at an inflection point. From an evolving regulatory landscape to geopolitical turmoil, to the rise of generative AI (GenAI) and ongoing questions about the direction and duration of a possible “higher-for-longer” environment, asset managers are confronted with both challenges and opportunities. While there are a multitude of areas to keep a close eye on throughout the year, here are three of note:
POSSIBLE RATE CUTS
After operating for years in a low-rate environment, the rapid pace of rate hikes seen in 2022 and 2023 forced asset managers to quickly adapt. In recent months, the Federal Reserve has begun to signal that they will tap the breaks in 2024 as they seek to possibly cut rates later this year. According to a recent survey KPMG conducted of asset managers at the end of 2023, a majority of respondents anticipated rate cuts in the second half of 2024 or even earlier, in line with broader market expectations. The market needed a signal that rates would not increase for transactions and deal activity to pick up, and the possibility of interest rate cuts in 2024 creates a more favorable environment for asset managers.
The survey also revealed that a majority of respondents felt that their organization’s ability to deploy capital or grow would not be impacted if the federal funds rate remained at 5.5% or higher in 2024. What we can take from all of this is that asset managers aren’t so much concerned about the level of interest rates as they are about their varying trajectory and timing.
REALIZING BENEFITS OF GenAI, ADDRESSING LEARNING CURVE
Every industry is still in the opening stages of beginning to comprehend how emerging technologies such as GenAI are going to impact the ways in which we work. While there is uncertainty over the long-term implications, what is clear is that the…
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