06Jun

The future of alternatives is bright, with the financial sector growing at an annual rate of almost 10% between now and 2025.

Preqin, an alternative assets data and analytics firm, predicts that in five years the sector will have $17.16 trillion in assets under management (AUM), a 60% increase from today’s $10.74 trillion.

The two biggest drivers of that growth will be private equity at a 16% compound annual growth and private debt at 11%. By 2025, $9.11 trillion will be invested in private equity funds, accounting for over half the total in alternatives. Private debt will grow 72% to $1.46 trillion.

“Growth in the other asset classes will be more modest,” says Preqin in the first of its Future of Alternatives 2025 series, “but with our forecasts around 5% for each segment, it will still likely outpace increases in GDP.”

Preqin predicts hedge funds will continue to be the second largest class at $4.26 trillion, however growing at only about a 3.6% CAGR. Real estate, at a predicted 3.4% annual growth, will be the slowest.

The bullish report says Asia Pacific will see the fastest growth with assets increasing from $1.62 trillion to $4.97 trillion over the next five years. That will represent about 29% of the total AUM. By contrast, North America will grow modestly, reaching $8.6 trillion by 2025.

The first installment of its series offers a broad look at the future of alternatives with projections of AUM in each asset class, as well as projected growth for the industry as a whole globally, as well as regionally. Detailed insights and analysis are provided for each of the asset classes.

Future installments will focus on investors, opportunities for fund managers, global and regional developments. One installment entitled “How Megatrends Will Transform Alternatives,” will discuss diversity, big data regulation and the investment landscape post COVID.

Photo by Gilly on Unsplash

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Influencer is the Hottest New Marketing Career (Sample)

When the pandemic hit and Americans hunkered down, spending on essentials and entertainment, but on little else, brands naturally cut their marketing budgets.

One area that survived was social media influencers. After dipping slightly at the outset of the quarantine, social influencer spending quickly returned to pre-COVID levels. Meanwhile, other advertising, including digital, continued to decline so much that 7-in-10 CMOs have seen an average 19% cut in their marketing budgets.

From an almost accidental niche specialty, influencer marketing has become a big part of digital marketing. Spending on social influence was estimated to hit $9.7 billion this year.

Marketers report that for every $1 they spend on social influence they earn an average media value of $5.78. No surprise then that influencer jobs have become one of the hottest new marketing careers. By virtue of the relationship they’ve established with their audience, social media influencers can introduce their followers to a new brand, or boost an established brand’s sales simply by posting about them.

Until recently, influencers didn’t see what for many began as a hobby as a career. They wrote blogs, posted videos and images to YouTube and Instagram channels and otherwise produced content about what most interested them. As they gained followers, they gained influence and companies noticed.

Kylie Jenner, with 164 million Instagram followers, can drive huge sales for her cosmetics line and for other products she promotes. So effective is her influence that companies pay her hundreds of thousands, even up to a million to post about their products.

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Banking’s 2021 Outlook: Transformation and Resilience

When the pandemic forced the shutdown of businesses across much of the world, one of the sectors that adapted quickly was finance.

In a detailed forward-looking article, Deloitte applauded banking’s response calling it “notable… Banks effectively deployed technology and demonstrated unprecedented agility and resilience.” Looking ahead, the report says now is the time for the industry to institutionalize what it learned about engaging customers, digital transformation, finance and talent, among others.

While COVID impacted so many areas of the global economy and work, perhaps the most highly visible is in workforce management.

“Banking leaders around the world have faced an array of challenges on the talent front, from shifting to a remote, distributed workforce to finding ways to keep employees engaged and productivity high,” says the report written by two of Deloitte’s most senior leaders in its Banking & Capital Markets practice: Mark Shilling, a vice chairman, and Anna Celbner, vice chairman of Deloitte UK.

A majority of banks adopted flexible schedules and focused on employee safety and well-being. However, the economic fallout also led many to implement layoffs, furloughs and voluntary time off. Further “hard decisions on optimal talent models” may need to be made in 2021, the writers acknowledge.

But as uncertainties continue, “Bank leaders should continue to proactively recognize employee concerns, be sensitive to their personal/family needs, and prioritize physical and psychological health efforts that can also help maintain employee productivity.”

To improve retention and engage workers, especially the many that work, and may continue to work remotely, banks must “transform their talent strategies to enable employees to learn better, faster, and more frequently.”

Teaming needs to change to “facilitate flexible, self-organizing teams that come together for a common purpose,” the authors write. “Boosting productivity, creativity, and collaboration should be the ultimate goals.”

The lengthy report addresses multiple other areas of banking operations, suggesting how the industry can build on the lessons of the last year, as well as proposing ways to manage the uncertainties ahead. Resilience, a recurring theme throughout the article, is the overall message.

Acknowledging that, “Uncertainty about the effects of the pandemic will likely remain for the foreseeable future,” Shilling and Celbner, say “This should not prevent bank leaders from reimagining the future and making bold bets.

“They should institutionalize the lessons from the pandemic and build a new playbook by strengthening resilience now and accelerating the transformation in the post-pandemic world.”

Photo by Sharon McCutcheon

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