The conviction held by the majority of fund managers is that, with the exception of CDOs, the volume of complex investment instruments will in fact continue to grow over the next two years. In contrast, 70 percent of investors say that they have lost interest in complex products as a result of the credit crisis.
One in five fund managers who have invested in complex financial instruments admits that their company does not have any specialists with sufficient experience of these types of products. Almost half (40 percent) say that they have already invested in products without having access to adequate risk assessment instruments.
Markus Schunk, Partner and Head of Asset Management for Audit Financial Services at KPMG Switzerland, says: "The industry's self-deprecating image does not fit 100 percent in Switzerland. The percentage of complex products in Swiss funds is, on average, less than five percent, but this does not mean that there were not some instances where, in retrospect, a surprisingly high number of complex products were bought without the consequences of diminished price transparency and the prospect of shrinking liquidity being considered."
Incidentally, the fund managers questioned also seemed to be aware of this. As a result, around 90 percent plan to spend significantly more money on risk surveillance, valuation and compliance over the next two years.
In the course of the study, 333 high-ranking managers in the field of global asset management across 57 countries were interviewed; they can be divided up into regions as follows: 31 percent of those surveyed operate in North America, 29 percent in Western Europe, 23 percent in Asia- Pacific and the rest in other parts of the world. In addition to the survey, the Economist Intelligence Unit carried out a number of extensive interviews with leading asset managers, hedge funds and industry experts.