Equity markets may have kicked off 2012 with a bumper performance in January but this short term joy fails to mask the fact Britain’s asset management industry faces significant challenges.

Continued downward pressure on pricing, ever increasing regulatory demands, the rise of more sophisticated passives, greater frequency of periods of volatility, growing consumer sensitivity to fees and charges and structural industry shifts forcing distributors to lean on asset managers are just some of the reasons asset management firms may not feel rosy today.

One of the other areas managers can compete, in addition to sucking in money to manage, is the cost of doing business.

The industry tends to regard fund flows as the ultimate determinant of success, however, if this success is due to a high cost of acquisition then unless the flows are sticky then it’s highly likely the asset managers actually lose rather than gain.

As an example, Aberdeen Asset Management saw £2.8 billion of funds walk out of the door in 2011 as investors took flight from emerging market investments.

To bring in this money in the first place would have cost the group a great deal of time, effort, and resources.

With this in mind, CoreData Research UK is conducting a study to measure how effective managers are when it comes to business efficiency.

In this study we utilise a measure of managerial efficiency, known as cost efficiency or X-efficiency, to explore the relative efficiency of Britain’s asset management industry.

In calculating such a measure we can establish how management can best increase overall efficiency and reduce waste in their institutions in the best interests of their customers and shareholders.

The concept of X-efficiency departs from the hypothesis that economic efficiency, based on perfect competition assumptions, does not hold in reality.

Thus, assessing the performance of asset managers should not be done in relation to the theoretical ideal of efficiency, but to a benchmark elaborated on the basis of empirical observations.

Through stochastic frontier analysis (SFA), the study uses industry data to estimate a hypothetical efficient frontier formed by the points where costs are minimised for every level of output.

An efficiency score is then calculated for each firm by evaluating their cost/output combinations in relation to those on the efficient frontier.

Graphically, this score can be conveyed as the distance between the firm and the efficient frontier on cost/output space.

The study obtains the efficiency scores, ranging from 0 (absolute inefficiency) to 1 (efficiency), for listed asset managers in the UK and compares their relative performance in using the resources available to them and reducing the cost of doing business.

The use of SFA provides key insights into the causes of inefficiency by identifying the level of technical and allocative inefficiency, allowing managers to establish how they can best reduce waste and increase their level of efficiency in the best interest of their institutions, shareholders and customers.

In addition, a single economic indicator, in the form of efficiency scores, has great potential in its scope and can serve as a consistent industry-wide measurement of managerial performance.

A little heavy for a blog perhaps, but the propeller heads in the business are really excited by this project.

Especially as we can then apply it to certain parts of the business i.e. how effective is the marketing team? Answer… wait and see. срочный займ кто брал займ под материнский капиталзайм под мат капиталзайм под материнский капитал краснодар