The business climate for asset managers around the world is expected to be tougher as market conditions become more challenging, a study of hundreds of firms says.

A study of more than 500 asset managers, asset owners and insurers around the world by State Street shows that 68 per cent are concerned about whether they can hit their growth targets in uncertain market conditions, as at present.

Some 72 per cent of asset managers expect to slow down their expansion plans in the next five years, the report, New Routes to Growth, said.

Nearly half of respondents (48 per cent) said that “emerging technology” such as blockchain distributed ledgers and artificial intelligence would be top enablers of growth, versus 18 per cent taking this view when polled on this question a year ago.

With equity markets having been in a bull market for almost a decade, US interest rates rising and monetary policy starting to “normalise” in certain regions, the ability of asset managers to earn a profit could become more challenging. Rising costs, and the ascent of low-fee index-tracking funds such as exchange traded funds have put a premium on economies of scale, big brands, and tech efficiencies.

The State Street survey also found that institutions want to improve their ability to extract better insights from data, with 58 per cent of respondents naming this as a key focus area. Strengthening risk analytics was cited by 43 per cent of respondents as a top outcome that their technology must deliver over the next year.

There is a note of caution among respondents, however, as just over two-thirds (61 per cent) indicated that they would take an incremental approach to embracing emerging technologies versus re-engineering their entire IT ecosystems. Furthermore, many firms are selectively seeking tech partners as a way to gain scale given the cost involved with an architectural overhaul.