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Friday, October 02, 2009

Industry Experts Discuss Consolidation, Compensation

Reported by InvestmentWires Staff, 

Consolidation, compensation and ETFs were among the subjects that popped up during the "Future of the Business" session at The MFWire Influencers' Summit in Boston on Thursday.

Keith Hartstein, president and CEO of John Hancock Funds; Darlene DeRemer, parter at investment bank Grail Partners and George Wilbanks of executive search firm Russell Reynolds were the panelists in the session, which was moderated by Lisa Cohen of Momentum Partners.

"There's been consolidation in the business and we think that will continue," said DeRemer. The session took place a day after the Ameriprise-Columbia deal was unveiled.

Later during the Q&A session, a summit attendee asked whether private equity was still a player.

"They are, but in a different way, given how expensive debt is today," DeRemer said. "There's not a lot of liquidity in the debt markets."

She mentioned the purchase of minority stakes and said deals are mainly based on cash. "They will come back to the market, but it's going to take a while," she said.

DeRemer said there are "at least 20" private equity firms looking at the possibility of being in the space.

Meanwhile, Wilbanks sees compensation, which, unsurprisingly is down this year, to "stay flat for a couple of years."

For his part, Hartstein wondered about the impact of the events of the past year on market share.

"A lot of money moved to the sidelines in the last 12 months," he said. When the time comes, will investors reenter into the same vehicles or are they going to research alternative vehicles?"

On the subject of ETFs, Hartstein said his firm is watching the ETF industry "with an interested eye."

"We have one foot in the boat and one foot on the shore," Hartstein said. Hancock in August filed with the SEC to launch a batch of index-based ETFs.

Harstein noted the speed with which some firms put out ETFs only to shutter them a year later.

"The real kicker in ETFs is when somebody converts an open-end fund to an ETF," he said. 

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