Trusted Advice in a Changing Market

“Fund management is being reshaped by scale, scarcity and conviction”

The fund management industry is operating against a challenging macroeconomic backdrop. Deglobalisation, demographic pressures, significant government debt and digital disruption are all reshaping how capital is allocated.

For companies and governments, this means greater competition for capital, particularly as the requirement to invest in physical assets and infrastructure increases. For portfolio managers, the challenge is becoming more acute: how to utilise AI to analyse and manage portfolios more efficiently in a more complex, capital-constrained environment.

In response, the industry is scaling and diversifying. Asset managers are seeking greater scale to manage cost inflation, client service demands and fee pressure, while also diversifying into areas like private assets and credit.

Market concentration remains another major theme, particularly in the US, where the “Magnificent Seven” dominate index performance. The UK, by contrast, offers a broader market with exposure to a more diverse range of sectors and industries. This creates an opportunity for active managers to move away from index tracking and invest in new ideas with conviction.

“AI may not be a bubble, but there will be winners and losers”

There is no clear consensus on whether AI valuations represent a bubble, but investors are closely watching for potential catalysts that could change sentiment.

What is clear is that AI is likely to drive significant over-investment. As with previous technology cycles, only a relatively small number of companies are likely to emerge as long-term winners.

For companies, the imperative is to think carefully about both the risks and opportunities presented by AI. Business models may need to evolve, and management teams will need to demonstrate a clear understanding of how AI investment supports long-term value creation.

Boards also have an important role to play. They must consider not only whether to invest in AI, but also how quickly to move, where to allocate capital, and how to govern the risks associated with rapid technological change.

“The UK listing debate is really a public markets debate”

The challenge facing the UK is not simply one of UK versus US competitiveness. The more important dynamic is public versus private markets.

Globally, private markets are deeper than ever, reducing the incentive for companies to IPO. The lack of new listings and the trend of companies being acquired before reaching public markets is not unique to the UK. Similar issues are being seen in the US, particularly among small and mid-cap companies.

The key question is how to encourage more companies to transition from private to public markets.

To improve the UK’s attractiveness as a listing venue, several priorities stand out, including encouraging greater investment from UK banks into growing companies, building a more supportive retail investor base through education and incentives, continuing to lighten the governance burden while maintaining appropriate standards.

The UK has a strong foundation, but it needs a broader ecosystem that actively supports companies before, during and after listing.

“IR is a strategic function”

The role of investor relations continues to evolve. IR is increasingly becoming a strategic advisory function, supporting Boards, executive management and investors.

At its best, IR makes life easier for all key stakeholders – in particular, management, Boards and investors. It helps management understand the market, helps investors understand the business, and helps Boards interpret shareholder sentiment.

A core part of this role is narrative development. IROs need to help create a clear, consistent and credible understanding of the business, its growth plan and its investment case.

Changing market perception is one of the areas where IR can have the greatest impact. That requires cutting through noise, avoiding unnecessary complexity and being more open and honest with investors. The fundamentals remain important, including clear investment cases, building direct relationships with investors, and prioritising face to face engagement wherever possible.

Retail investor engagement is also becoming more important. For retail audiences, the balance between “excitement and valuation” is key. Companies need accessible websites, simple materials, video content, retail communications platforms and an intelligent approach to social media.

“The Board needs IR’s view of the market more than ever”

The role of the Chair has evolved significantly. Chairs now need a deeper understanding of the business, the market environment and investor expectations.

IR has an important role to play in supporting the Chair and the wider Board. This includes providing investor feedback, market intelligence, shareholder insights and access to investors through meetings and engagement programmes.

IROs can also provide an independent perspective. This is especially valuable when Boards are assessing how the company is perceived externally, what investors are concerned about, and whether the corporate narrative is landing effectively.

The seniority of the IRO also sends a signal to the market. It demonstrates how seriously the Board and executive team take investor relations.

For IROs, the challenge is to show the executive team why IR deserves a stronger voice in the Boardroom. That means demonstrating commercial insight, strategic relevance and a clear understanding of investor priorities.

“The best defence against activism is to think like an activist”

Preparation is critical when it comes to shareholder activism.

Companies should ensure they have the right defence advisers in place, a clear action manual, and a Board that regularly reviews its own view of the value of the business. This should not be a one-off exercise. Valuation and potential vulnerability should be reviewed at least annually.

Understanding the share register is equally important. Shareholder support before an activist campaign begins can be decisive. Companies should maintain regular dialogue with major shareholders, recognising that many may also be speaking to activists.

A key principle is to treat all shareholders equally. Activists may act in concert, and companies need to be disciplined and consistent in how they communicate.

The strongest advice is to “be your own activist”. Companies should proactively identify weaknesses, challenge their own strategy and address issues before an external activist does.

Activists can also provide constructive challenge. They are often among the first to identify opportunities or inefficiencies. Companies should therefore listen carefully, even if they do not agree with every recommendation.

Early warning signs may include unusual trading activity, shifts in shareholder tone, and investor questions around consolidation or strategic alternatives.

“The IPO is not the finish line, it is where the real work begins”

IPO preparation is fundamentally about stakeholder management, both internal and external.

The corporate story will evolve throughout the IPO process, but it must remain clear, credible and grounded in evidence. Investors will look for a track record of delivery, realistic KPIs, transparency and a management team that understands what it means to be public.

Companies should avoid over-promising or over-complicating the story. A successful IPO narrative is simple, credible and repeatable.

IR has a central role to play in the process. The IRO should help lead internal IPO project management, coach management on messaging and ensure the Board is engaged throughout.

However, the IPO itself is only the beginning. Once listed, the real work starts: developing the IR strategy, targeting the right investors, preparing the business for public market scrutiny and continuing to evolve the corporate narrative.

“In a more demanding market, IR has a bigger role to play”

In summary, the conference highlighted a period of significant change across capital markets, fund management, listed companies and investor relations.

Several themes stood out: the increasing competition for capital, the growing influence of AI, the challenge of revitalising public markets, and the expanding strategic importance of IR.

For IR professionals, the message is clear. The function is becoming more central to corporate strategy, Board engagement and market perception. IROs who can combine clear communication, investor insight and strategic judgement will be increasingly valuable to their organisations.

In a more complex market environment, IR has a critical role to play in building trust, sharpening the equity story and connecting companies with the capital they need to grow.

About the Author

Rob joined Inchcape plc, the leading global automotive distributor, as Head of IR in April 2023, have previously been at Plus500, a global fintech group, which he joined in May 2020. Prior to that, Rob spent 3 years as Head of IR at Inmarsat plc, a satellite operator, before which he was Head of Global Investor relations for Tokyo-listed Dentsu Inc, following their acquisition of Aegis plc in 2013, where was Head of IR. Before that, Rob had senior IR roles for Lonmin Plc, a platinum mining business, and G4S plc, a security services company. Before moving into in-house IR, Rob worked for a number of financial communications consultancies. He is Deputy Chair of the Society and chairs its Conference and Finance Committees.