The Death of Discretionary Asset Management and Rise of Data-Driven Investment

Data-driven services have made the active asset management industry experience a major shakeup, as these investment strategies (especially digital services) continue to grow in popularity. Their lower cost and greater efficiency make them more and more attractive to potential clients. Discretionary fund management is losing its appeal to investors. These firms typically charge based on a 2/20 structure, while rarely beating the success of index funds. Algorithmic investment models continue to rise because they tend to deliver better yields while keeping costs low. As a result, many traditional investment management firms have transitioned to try to stay competitive. The growth…...