WHAT DO YOU BELIEVE ARE THE GREATEST CHALLENGES FACING THE SECTOR OR INDUSTRY YOU WOULD LIKE TO SPECIALIZE IN AT IE? WHAT ROLE DO YOU HOPE TO BE ABLE TO PLAY IN THIS SECTOR OR INDUSTRY IN THE MEDIUM TERM?

1. IE
APPLICATION
WHAT DO YOU BELIEVE ARE THE GREATEST CHALLENGES
FACING THE SECTOR OR INDUSTRY YOU WOULD LIKE TO
SPECIALIZE IN AT IE? WHAT ROLE DO YOU HOPE TO BE
ABLE TO PLAY IN THIS SECTOR OR INDUSTRY IN THE
MEDIUM TERM?
MAY 2016
UDAY VIKRAM

2. INVESTMENT ADVISORY & WEALTH MANAGEMENT
“Utilitification” of the
Banking System
Global Policy Framework
& its Impact
Technology
Investment Strategy Investment Infrastructure

3. VARIOUS INTERCONNECTED FACTORS IMPACTING THE
INVESTMENT MANAGEMENT INDUSTRY
“Utilitification” of the
Banking System
Higher Capitalization
Requirements means
Lower Leverage & ROE
Business Exits, Move
towards less capital
intensive businesses
Gaps Left in the Market
Policy Response to GFC
Monetary Stimulus, Zero
Interest Rate Policy (&
Below)
Government Policy the
main catalyst for Capital
Markets
Yield Hunt & Shift in
Investor Preference
New Players & Market
Segments
Alternative Investment
Strategies

4. Investment Strategy
Investment
Infrastructure
Cost & FeesUntapped
Market
Segment
Interaction &
Reach
Active vs.
Passive
CONVENTIONAL INVESTMENT ADVISORY & WEALTH
MANAGEMENT INDUSTRY – OPPORTUNITIES &
CHALLENGES
Portfolio
Allocation
Theory
Alternative
Investments
& Markets

5. BANKING REGULATION & LOW INTEREST RATES –
YIELD HUNT & ITS IMPACT
• Investors Chasing Returns – Leading to Massive debt loads in High
Yield bond market and Emerging Market
• Banks/Dealers/Brokers holding less inventory due to regulatory
changes
• Alternative sources of lending picking up as Banks continue to
recapitalize
• One of the problems the combination of the two factors is causing
are liquidity concerns in the fixed income markets – It now takes 60
days to liquidate HY Bond Fund / ETF from less than 7 days in 2007
( Source: IMF, BoAML)
• Question of Adequate compensation for risk?
In Search for Opportunity & Solutions (Investment Infrastructure)
• Alternative Markets – Borrows & Lenders
• Investors increasingly searching for alternatives sources
for yield – Technology is making it possible
• Peer to Peer Lending
• “Beehive – UAE first online marketplace for peer to peer
lending”
• Technological Solutions to solve liquidity problems
• “TRUMID is an all-to-all electronic credit trading platform.
It is designed to unlock liquidity and make bond and CDS
trading easier”
Source: TRUMID
Source: Beehive

6. INVESTMENT STRATEGY & TECHNOLOGY
Question of Adequate compensation for risk?
• Investors looking at Alternative Investments for better
risk / rewards
• Investors concerned about costs & fees
• Questioning Active/Hedge Fund managers &
Financial consultants performance &
associated fees
• 2015 Was the First Time Since the Recession That More
Hedge Funds Closed Than Opened (Source: Fortune)
• Large Hedge Funds returning funds to investors –
sighting less opportunities for outperformance
• Largest Pension Fund in US entirely stopped investing in
Hedge funds in 2014 (CalPERS)
In Search for Opportunities & Solutions (Investment
Strategy)
• Alternative Investment Strategies Gaining Popularity
• Active Vs. Passive & Passive Active (Smart
Beta)
• Risk Parity vs. Mean Variance
• Robo Advisors – Cost efficient platforms
• Catering to new market segments &
challenging existing players
• Using technology to reduce costs and
accomplish scale
• Investment Strategy based on algorithms
based on historical data and low cost
investment vehicles
Source: Research Affiliates
Source: Betterment

7. VARIOUS MARKET SEGMENTS – HOW TO ADAPT
Institutional Investors
Premier Banking –
Affluent Clients
High New Worth
Individuals
Retail Segment
Ultra High Net Worth
Individuals & Families
Untapped Segments
Technology Disrupting
• Mode of Interaction
• Cost & Fees
• Reach & Scale
Investment Strategy –
Shift in Preference ,
Distortions created by
Policy Framework &
Technology Disruption
• Investment Strategy
Differentiation
• Improve client
experience
• Embrace
Technology (Cause
it’s coming anyways)

8. CHALLENGES & OPPORTUNITIES
• With Technology encroaching & Investor preferences changing, the Wealth
Management / Investment Management Industry needs to adapt depending on the
market segment it caters to
• Two choices (however not mutually exclusive)
• Use Technology to engage, entrench & improve scale
• Differentiated Investment strategy
• Index hugging / Passive Investment strategies will find it hard to compete with new
technology driven solutions & platforms
• Moving up the ladder in terms of the Market Segment and Investment strategy will
help firms and Investment professionals continue to grow
Investment
Strategy
Investment
Infrastructure

9. WHAT ROLE DO YOU HOPE TO BE ABLE TO PLAY IN
THIS SECTOR OR INDUSTRY IN THE MEDIUM TERM?
At the intersection between Differentiated Investment
Strategy, technology for superior client experience &
Investment platform
Macro Research
Investment
Strategy
Industry Insight
Investment
Platform

10. THANK YOU
UDAY VIKRAM