Mood of the month

Fairly optimistic
The European fund buyer’s mood index after having dropped on 60.8 points (in July was navigating on 62.1 points) in August lightly rebounded reaching 61.8 points in September. The general downtrend kept being driven by UK, Sweden, Switzerland and Belgium where less of 40% of the interviewed fund selectors declared to be optimistic over the next 12 months. On the other hand Spain and Germany managed to offset the general negative mood with over 65% of optimistic and very optimistic fund buyers in September.

Distributor commentary

For the week ending 22th September 2017
  • “There needs to be a general purging of all those products that no longer make sense and that are just lying there in providers' product ranges. Products that are either underperforming, or holding only tiny pools of assets because they have lost the early momentum that appeared to justify their existence, having been launched just to join bandwagons that have long since passed.”

    Product innovation requirements
    Italy, Private client portfolios - Discretionary
  • “I suppose that the currently growing interest on asset managers' part in 'small-beta' products might be considered as an example of innovative behaviour. Such products are sort of a 'half-way house' between active and passive vehicles. We are certainly very aware of the importance to our clients of the right relationship between product cost and product performance, and small-beta products are designed to try to provide that.”

    Innovative behaviour in fund industry
    Belgium, Private client portfolios - Discretionary
  • “Passive products' share of the overall market has reached a substantial level but I think that when correlations fall and the market stabilises, active management with a view to generating alpha will stage a comeback. Meanwhile, I think that the technological developments that we are seeing at present, and the rapid adaptation on the part of asset managers to the demands of the market, are going to be drivers of change in the fund industry.”

    Drivers of change
    Spain, Funds of funds management
  • “What I would like to see in asset management are products that are open to new investment approaches, employing new strategies and investing in new sectors. An example of what I mean here would be what we are seeing nowadays with the increasing incidence of alternative-investment strategies becoming available in a Ucits-compliant format. Failing that, I would at least like to see more specialisation in particular strategies i.e., a less generalist approach in the product offering overall.”

    Product innovation requirements
    Italy, Private client portfolios - Discretionary
  • “Cost pressures and the end-customers’ perception of costs exercise an increasing influence on the fund industry. On the product-side, so-called bond-replacement products will have to demonstrate that performance expectations can also be fulfilled when interest rates rise again. The issue of ETFs and passive investments will gain further significance. The added value of an active management is often difficult to make out in comparison to passive products. Sustainability will become a topic of greater attention, particularly for the insurance branch.”

    Drivers of change
    Germany, Insurance - including unit-linked products
  • “Demand for products that have an ESG (environmental, social and corporate governance) orientation will be the most important driver over the next few years. I think we are going to see many more managers adapting their investment processes so that they are focusing on companies that are, first and foremost, well managed and that ideally also operate in a manner that has a positive impact from a social and environmental point of view. I think we are seeing a lot of that already, and asset managers are certainly taking it more seriously than they used to.”

    Drivers of change
    United Kingdom, Private client portfolios - Discretionary
  • “MIFID 2 is the most important one, without any question. For us it will mainly be a time issue and we are relying on the fund houses to provide us with the industry fee for their target markets and then we will have to decide which funds in our selection have the right or wrong target market. This will be a lot of work, but we are in close contact with our providers to make sure that the communication is quick.”

    Drivers of change
    Netherlands, Funds of funds management
  • “The cost factor will steer a lot of investors towards ETFs, which will lower margins. In order to compensate for the cost factor, managed portfolios will be made more widely available. A lot of customers won’t be able to afford financial advice any longer, and banks will not offer advice for investment volumes under a certain size. Therefore, automated strategies or automated managed portfolios will gain in significance. This will give an enormous push to robo-advice.”

    Drivers of change
    Germany, Fund supermarket / Online fund platform

Changes ahoy

21 August 2017
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by Fiona Maciver

Distributors and manufacturers alike continue to grapple with challenges on many fronts in this period of rapid industry transformation. Regulation and pricing still feature heavily in fund buyers’ thoughts on the key drivers of change in their line of business. Despite all this upheaval, European selectors have an appetite to add new talent to their buy lists, and,

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