Restoring retail investor confidence

28 July 2014
By Fund Buyer Focus

By and large, increased optimism among fund buyers has not yet fed through into many meaningful changes to the overall mix of sales flows into long-term funds. Also the sales data for June has highlighted the continued dominance of fixed income and mixed assets. Looking ahead to top-level future asset allocation trends, the sectors most likely to benefit from increased allocations are equities, alternatives and passive funds according to the latest data from Fund Buyer Focus.

Recent sales data from across Europe clearly highlights that retail investors’ confidence has picked up from the very low levels seen in the wake of the financial crisis. That said, those with the confidence to invest in funds are still relatively cautious, with new money favouring mixed assets and fixed income. While professional fund buyers are more optimistic on the economic outlook, they remain vocal in their expectations of asset managers to support the sales process and stimulate investment from retail clients. In the latest research results from Fund Buyer Focus, fund selectors ranked transparency, performance, and marketing/promotion as the priority areas for asset managers to support them in distributing their funds and encouraging more savers and investors into the market*.

Actions needed to encourage retail investors

Actions needed to encourage retail investors

*Responses are based on answers to the question ‘What action is needed by the fund industry to encourage retail investors back to mutual funds?’ Responses from 926 fund selector interviews between 01/05/2013 and 30/04/2014.

Post-financial-crisis increases in regulatory requirements and investor needs have intensified the arguments for greater transparency across the financial services sector, explaining why distributors basic regulatory requirements, what does this need for transparency mean for retail distribution and boosting sales? Reviewing distributor feedback on the subject reveals that clarity around pricing, product and end-investor communications all remain common themes that need to be taken into account on this matter.

*Source MackayWilliams in association with Fund Buyer Focus: Fund Radar Second Insight May Issue 2014