Vontobel CEO Sees Politics Challenging Asset Manager Profits

  • U.S. election, Brexit make asset performance a guessing game
  • Staub says will be difficult to boost profit in second half

The U.S. presidential election and the aftermath of the Brexit vote will make matching last year’s revenue “very challenging” for many asset managers in the second half of 2016, according to Vontobel Holding AG’s Zeno Staub.

The “impact of political decisions on economic outcomes is for many people too high,” especially for asset allocations based on macroeconomic conditions, Staub, chief executive officer of the Zurich-based bank, said in an interview Tuesday in Geneva. For “business models that are purely, or heavily, dependent on transactional revenue, it will be a very challenging year.”

Vontobel, which has investment banking, private wealth and institutional asset management operations, said in April that first-quarter profit weakened on lower client activity and trading volumes and client assets fell to 142.3 billion Swiss francs ($144 billion) at the end of March. The firm, which manages about $100 billion for institutional asset management clients, has sought to expand that business through the acquisition of Vescore Ltd. last month and Twenty Four Asset Management LLP last year.

Britain’s surprise decision to leave the European Union in a referendum on June 23 left asset managers scrambling to cover positions. And while markets have calmed since then, it could be years before the full repercussions of the vote are clear. In the U.S., meanwhile, November’s presidential election is keeping investors guessing as polls continue to show a tight race between Hillary Clinton and Donald Trump.

Political volatility makes the job of fund managers “even more difficult than it has always been," and asset-management companies will on average struggle to boost revenue in the second half, Staub said.

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