High costs, weak performance hurting active fund managers

IN theory, the outlook should be rosy for the fund management industry. Vast swathes of the world are grappling with ageing, creating demand for investment products that stand a chance of earning a return greater than cash rates. Low interest rates and persistently low bond yields nudge savers towards higher risk products, which is surely an opportunity for active fund managers.

Yet over the past few months, the global trend in the industry has been one of consolidation - and analysts believe that this wave will intensify. Deals that have made headlines include the merger of Janus Capital and Henderson; Standard Life and Aberdeen Asset Management; and Amundi's US$4 billion purchase of Pioneer. A number of challenges mar the outlook for active fund manag…