Optimism among investment managers rose for the fourth successive quarter as business volumes and incomes grew again, according to the latest CBI/PwC Financial Services Survey. 

Numbers employed also increased for the third quarter running. Securities trading respondents saw business volumes and income values fall and average costs increased. However, the decline in profitability is expected to ease considerably in the next three months.
 
Robert Mellor, hedge fund practice leader at PwC, says: “Investment managers remain remarkably optimistic. Overseas business is growing, but it remains to be seen if predicted retail growth will materialise.

“In the current environment of economic uncertainty, but comparatively stable financial markets, it will be interesting to see if retail sales can improve on 2012’s disappointing figures. The first quarter of 2013 will be crucial if the sector is to justify the strong optimism that has been its hallmark throughout 2012.

“Regulatory uncertainty is exceptionally high and is seen as a barrier to growth by 91 per cent of respondents; a striking response and the highest figure in more than 20 years of survey data.

“The sector also faces a particularly high level of uncertainty over the impact of new regulations. The final implementation of the alternative investment fund managers directive (AIFMD) remains frustratingly unclear, firms are waiting to see how the RDR reforms will affect their business, and the sector faces a range of emerging initiatives such as the EU’s proposals on shadow banking.”