Â鶹´«Ã½ÔÚÏß

"We believe that embedded asset management will be the next step"

Sven Württemberger
CEO DWS Schweiz AG

 

Asset management as a financial discipline and as an industry is currently undergoing enormous change: how do you perceive these developments in your day-to-day business?

We are seeing fundamental changes and trends in customer behaviour. Then there are new digital technologies. Both are catalysts for major change in the asset management industry. We want to find the right answers to these primarily digitally driven changes and are therefore focussing our future direction on the topics of technology and data. We also see two major areas of influence that are changing the industry in the long term. The first area is the transformation of the industry due to trends that have been observable for quite some time and can be described as evolution rather than revolution. The most prominent examples here are the trend towards passive investing, the growth in alternatives, the importance of self-decision makers and digital distribution channels, the role of technology, the pressure on margins and consolidation in the industry through M&A. The second major influencing factor is the rapidly changing geopolitical environment, which requires industry players to act in a new way. The opportunity is there for Europe to gain in stature and attractiveness globally as a counter to authoritarian regimes. In these times, more than ever, we need someone who can bring perspectives together. We call these skills #connecting the dots. In this context, we see it as both a great opportunity and an obligation to use our solutions for European transformation to attract private capital to Europe in order to invest here.

Switzerland is an island in many respects - or a special case. From a global perspective, does this also apply to Swiss asset management?

Not at all, Switzerland is currently the third-largest asset management market in Europe in terms of assets under management. In particular, local conceptual expertise and close links with banks, wealth managers and institutional channels such as insurers and pension funds, which all play a leading role in the European and global context, create the ideal conditions for prosperous asset management. Switzerland also recognised trends early on, such as the boom in passive investing and, more recently, the growing demand for alternatives. The excellently positioned local providers, but also the strong representation of foreign asset managers, have created an environment that is probably unique in Europe. In addition, the current geopolitical uncertainties could contribute to a further appreciation of Swiss expertise. High quality standards, precision and reliability - attributes that we also like to summarise as ‘Swiss finish’ - are therefore key to the ongoing success of Swiss asset management. This is also confirmed by the steady growth in assets under management.

The industry needs to invest massively in technology: There are new digital providers that offer very favourable asset management services, for example in investment savings. Or cool apps that allow you to create a diversified investment portfolio at the touch of a button. Where do the major asset managers need to develop?

From a customer perspective, we see three digital trends in particular that we as asset managers need to find the right answers to. Firstly, customers are increasingly using digital channels for their investments. The hurdles for self-directed investments are getting lower and lower. Secondly, funds will increasingly be distributed digitally in future due to changing customer requirements and new market participants along the value chain. Thirdly, customers are using technology to bundle their investments and obtain a holistic overview of their assets. We are responding to this with our strategy for Asset Management-as-a-Service (SaaS), or embedded asset management solutions. As a B2B-oriented company, we want to improve the integration of our services into the offerings of our sales partners and are also looking for new partnerships along the investor journey. Embedded finance has already established itself in several other financial services. We believe that embedded asset management will be the next step in this development. We are therefore working with selected WealthTech partners to build a modular and scalable SaaS offering that can be integrated via Application Programming Interfaces (API).

Crypto investments seem to be the domain of US asset managers in particular. What is DWS doing in this area?

This may come as a surprise to many, but Europe, and Switzerland in particular, was actually the pioneer in crypto investments, the first jurisdiction to authorise cryptocurrency ETPs. The first products came as early as 2015, the first physical ETPs in 2018. The US market for physical crypto ETPs only emerged in 2024, with the approval of US spot Bitcoin ETFs by the SEC in January 2024. Prior to that, there were only synthetically backed US Bitcoin ETFs and more closed-end fund structures. However, the US has developed rapidly. For physical crypto ETPs, the US market is almost ten times the size of the European market with USD 95.8 billion in assets under management. At the end of March 2024, DWS launched two European single-coin crypto ETCs together with our partner Galaxy Digital, which offer investors 1:1 physically backed access to the two largest cryptocurrencies, Bitcoin and Ethereum, and thus simple, efficient and reliable access to the young and innovative asset class. In addition, we have already been able to gain experience on the investment side in the area of cryptocurrency ETPs for several years. Several years ago, for example, we began adding crypto ETPs as a small addition to selected funds where this is possible from a regulatory perspective and fits in with the fund's investment conditions and investment objectives.

Instead, the industry is now focussing on private markets - one cannot shake off the impression that this is happening because of the higher margins in this asset class. How do you see this?

We firmly believe that we can offer our clients attractive, sensible investment opportunities in the private markets sector, particularly in terms of returns and diversification. In addition, private markets offerings give investors access to promising growth markets or innovative technologies. Our recent decision to work strategically with our parent company Deutsche Bank also shows how important this topic is for us. We want to jointly develop private lending and investment opportunities in the private credit sector in order to offer our clients worldwide additional investment opportunities in this area. As part of the co-operation, we will have preferential access to certain asset-based finance, direct lending or other private credit opportunities issued by Deutsche Bank. This will allow us to offer additional private credit investment opportunities to our clients worldwide. Private Credit is an important offering for our clients who are looking for investment opportunities in the real economy.

Do asset managers need to evolve from a world of products to a world of solutions?

DWS has always seen itself as a solution provider and has always been broadly positioned in the retail and institutional sectors. We offer a comprehensive range of customised investment solutions that are tailored to the specific needs of different client groups. For institutional investors - companies, insurance companies, pension funds, public institutions and financial institutions - we offer customised investment strategies in various asset classes, including equities, bonds, real estate and alternative investments. But we also offer mandates for which we see strong demand in the APAC region, for example. We are therefore planning to expand our customised mandate business there. We also offer outsourced CIO services, for which demand is also rising steadily. We offer private investors a broad range of mutual funds, ETFs, ETCs as well as open and closed-end funds.

ETFs are seeing record inflows year after year - and margins in asset management are falling. How does this work out for DWS?

As a provider, our focus is on the needs of investors. These needs remain very diverse and individual. They range from sophisticated active dividend strategies to broad-based global ETFs. As DWS, we offer all of this - we have strong funds and an equally strong passive segment with Xtrackers. If demand develops in one direction or the other, we are well equipped.