Lukas
Strobl:
Fund
managers
have
had
a
rough
few
years
as
their
actively-managed
products
have
tended
to
underperform
much
cheaper
ETFs
and
the
money
kept
flowing
to
other
asset
classes.
I’m
here
with
Morningstar
fund
analyst
Mathieu
Caquineau.
Mathieu,
how
have
these
patterns
begun
to
affect
the
asset
management
companies
themselves?
Mathieu
Caquineau:
Well,
some
of
them
have
made
the
difficult
decision
to
restructure
and
cut
jobs.
Just
going
back
to
your
points
about
passives,
if
you
look
at
the
market
share
of
passives
over
time,
it’s
grown
from
around
10%
15
years
ago
to
27%
today.
And
that’s
a
huge
shift.
It
has
impacted
the
profitability
of
the
whole
industry
and
asset
managers,
well,
they
have
to
adapt.
And
of
course,
the
impact
is
more
profound
for
purely
active
managers.
If
you’re
a
globally
diversified
fund
company
with
a
product
range
spanning
passives
and
actives
like
BlackRock,
for
example,
you’re
not
going
to
feel
the
pain
to
the
same
extent.
Strobl:
So,
who
specifically
has
been
affected
by
these
layoffs
so
far?
Caquineau:
Well,
first,
let’s
say
that
asset
managers
will
try
to
protect
their
investment
teams
because
this
is
really
the
core
of
their
business.
Also,
it
could
be
seen
as
bad
press
cutting
investment
roles
while
trying
to
attract
and
retain
talent.
So,
cost-cutting
typically
target
so-called
supporting
functions.
And
that’s
what
we’ve
seen
in
the
last
18
months
with
job
cuts
announced
by
several
asset
managers
like,
for
instance,
the
asset
management
subsidiary
of
Goldman
Sachs,
Morgan
Stanley
or
JPMorgan,
they’ve
all
announced
layoffs,
but
they’ve
kept
their
portfolio
managers
and
analysts
as
far
as
we
know.
Another
example
is
Abrdn.
They’ve
announced
cost
reduction,
but
they
haven’t
touched
any
investment
roles.
But
sometimes
the
investment
personnel
is
impacted.
Take
Baillie
Gifford,
for
example.
They’ve
reportedly
laid
off
dozens
of
people
early
this
year
and
some
of
them
in
their
fixed
income
team.
Lazard
also
announced
a
plan
to
cut
around
100
jobs
in
their
asset
management
unit.
Most
of
them
were
sales
and
marketing,
but
we’ve
seen
a
few
fund
managers
leaving
at
around
the
same
time.
And
more
recently,
Fidelity
announced
quite
a
large
plan
to
cut
the
jobs
around
9%
of
their
total
headcount,
and
it’s
unclear
at
this
point
whether
investment
roles
will
be
impacted,
but
they
might
be.
Strobl:
Yeah
I
mean,
the
Fidelity
cut
was
huge.
And
obviously,
here
at
Morningstar,
when
we
rate
a
fund,
one
of
the
pillars
of
that
rating
is
the
people
pillar.
And
when
I
look
at
our
top-rated
funds,
what
I
see
very
often
is
a
deep
bench
of
analysts
at
these
funds.
So,
I’m
wondering
how
bad
does
this
have
to
get
before
you,
for
example,
start
to
reevaluate
the
people
pillar
rating
of
some
of
these
strategies?
Caquineau:
Well,
that’s
a
good
question.
Obviously,
we
keep
a
close
eye
on
this.
For
investors,
the
worst-case
scenario
is
when
a
firm
is
starting
to
cut
down
investment
resources
that
can
have
harmful
effects
on
the
funds
you
own
and
on
the
teams
running
your
money.
But
so
far,
the
layoffs
announced
have
not
had
a
huge
impact
on
the
core
capabilities
of
the
firm.
So,
we
haven’t
changed
actually
people
rating
or
parent
rating
on
any
of
the
firms
that
have
announced
layoffs
at
this
stage.
But
we’re
keeping
an
eye
on
this.
That
could
change.
And
we’ll
make
sure
that
any
meaningful
impact
is
reflected
in
our
rating
as
we’re
looking
for
potential
negative
effects
on
those
firms
and
teams.
Strobl:
So,
the
front
offices
have
largely
been
left
unscathed
so
far.
Thank
you
for
these
insights,
Mathieu.
For
Morningstar,
I’m
Lukas
Strobl.
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