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Geneva adviser: ‘AM industry at forefront of biggest ever disruption’

Geneva adviser: ‘AM industry at forefront of biggest ever disruption’

The asset management industry is about to feel the full force of technological change, waking asset managers from their deep slumber.

That is according to Bolko Hohaus, the founder of Geneva independent asset management firm HCP Hohaus Advisory.

In 2016, Hohaus left Lombard Odier after 14 years with the group to set up his independent firm. The former technology fund manager departed shortly before the asset management unit closed his former fund.

‘In my eyes asset management is at the forefront of the biggest disruption it has ever seen and the new players might not necessarily be the old players,’ he told Citywire Switzerland.

While the asset management industry has been slow to adapt, technological change will eventually allow for the creation of fully personalised products, he explained.

‘This begs the question whether those products will still be funds or other customised vehicles to save money.’

He said that this evolution is just one example of how drastically the asset management industry is about to change.

Hohaus foresees more large mergers in a highly fragmented fund industry, mostly driven by the trend in favour of lower fees and the move towards economies of scale. At the other end of the spectrum, he expects more small players to emerge.

‘Despite rising equity and bond markets over the past couple of years, fees have already come under pressure, and we even see zero-fee funds being offered as core products.’

Technology has enabled the rise of ETFs, he said, which has put pressure on fees.

‘This trend is hitting margins and we are seeing active managers cutting fees. Given the speed of change, the industry needs to find new efficiencies fast. That is why we are finally seeing the industrialisation of asset management coming.’

Milking tech

Technologies such as blockchain are set to make big waves. The potential is enormous, he said, and will bring the industry back in line with the times.

‘Isn't it an anachronism that we can deliver milk in one hour but shares settle three days later?

‘In theory, shares may be immediately settled once the transaction is initiated. Reconciling transactions, checking cash status or the identity of the buyer are all examples of applications which will be normal one day on the blockchain.’

With this, the manager revealed plans to put all products into blockchain. However, he conceded that it is still a little early, as the technology and the regulator are not ready yet.

Even so, the Swiss market authority has done well to keep up with the changes, he said. ‘Finma is in our view an authority that has understood that the world is changing and that it's important to embrace the technology change and support new concepts.

‘Where I see Switzerland letting go is in asset management, as it is often integrated into banks and therefore part of the business gets neglected and doesn’t get full focus.’

Plans to grow

In September 2016, Hohaus founded HCP Hohaus Advisory in Geneva. He launched two certificates in November of that year alongside former head of portfolio management at Rothschild Bank and ex-head of equities at Lombard Odier, Steffen Mack.

Hohaus and Mack co-manage the HCP Premium Equity Income certificate and the HCP Global Defensive Equity certificate. Also in the team is senior research analyst Torben Sommer.

Hohaus revealed plans to look into new technology products, as he is currently working on strategies in artificial intelligence and big data.

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