The long lines of the investment industry yvind G. Schanke, CEO - PowerPoint PPT Presentation

The long lines of the investment industry Øyvind G. Schanke, CEO

History of mutual funds 1924 Late 1700 1929 1934 1971 1976 First open- Stock market Origin of «Security First index Vanguard end mutual crash Investment Analysis» fund fund funds 2

1982: The Bloomberg Terminal 3

The dot-com boom and bust The Nasdaq Composite Index, daily close 6000 5000 4000 3000 2000 1000 0 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2006 4

Concentrated return drivers – USA and Asia MSCI Asia APEX 50 Nasdaq 100 Top 5 weight 43.5% Top 5 weight 46.0% Top 5 contribution, % of total 54.4% Top 5 contribution, % of total 58.8% Weight Return Weight Return 11.8% 44% 11.8% 85% 9.3% 30% 11.2% 61% 9.1% 35% 9.6% 108% 7.4% 48% 9.2% 44% 5.9% 56% 4.2% 36% Source: SKAGEN and for illustrative and discussion purposes only. 5

Stock exchange volume Total value (Trillion USD) $ 120 $ 100 $ 80 $ 60 $ 40 $ 20 $ 0 1975 1976 1977 1978 1979 1980 1981 1982 1983 1984 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 Source: The World Bank 6

Development of high-frequency trading (HFT) HFT as a share of US HFT industry revenues from equities daily volume US equities markets 8 $bn 60% 6 $bn 40% 4 $bn 20% 2 $bn 0% 0 $bn 06 07 08 09 10 11 12 13 14 15 16 17 09 10 11 12 13 14 15 16 17 Source: Tabb Group, Financial Times 7

Investment industry in the 21st century 2005 2002 2007 2013 High- Financial The Quants Smart beta frequency crisis trading 8

Lower transaction fees 9

Ant Financial – The world’s most valuable fintech company Yu’e Bao The world's largest mobile The world's largest money- and online payments platform market fund 10

Bitcoin is in classic bubble territory $000 per bitcoin, 2017 ‘New paradigm ’ Public Smart money Institutional investors Denial Delusion Greed Fear Bull trap Enthusiasm Capitulation Media attention Return to First sell-off median Despair Take-off Bear trap Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Mania phase Blow off phase Stealth phase Awareness phase Source: Financial Times 11

Bitcoin transaction costs growing Average transaction cost for Bitcoin $25 $20 $15 $10 $5 $0 2009 2010 2011 2012 2013 2014 2015 2016 2017 Source: blockchain.info, Morgan Stanley Research 12

Plato Partnership 13

Significant growth of Turquoise Plato Block Discovery Value traded (EUR millions over time) 8000 € 7000 € 6000 € 5000 € 4000 € 3000 € 2000 € 1000 € 0 € 2015 2016 2017 Source: Turquoise. Turquoise Plato Block Discovery includes volumes >25% LIS 14

The Great Eclipse Number of U.S. funds and stocks Stocks Exchange-traded funds 8 000 6 000 4 000 2 000 0 2016 1975 1981 1987 1993 1999 2005 2011 Source: bloomberg.com 15

Coming trends in the industry Robo-advice Machine learning and AI 2018 and beyond 16

Artificial intelligence 17

No short term super profits 106 105 104 103 102 101 100 99 98 97 96 okt 2017 okt 2017 nov nov nov nov nov des des des des jan 201 dec jan 2017 2017 2017 2017 2017 2017 2017 2017 2017 2017 2018 AI Powered Equity ETF S&P 500 Source: Bloomberg 18

The Nikkei 225 25 000 20 000 15 000 10 000 5 000 0 Source: Bloomberg, Twitter.com 19

” The stock market is a wonderfully efficient mechanism for transferring wealth from the impatient to the patient. Warren Buffett 20

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