The asset management world is changing fast, and not least in terms of the future expectations of the distributors on which fund groups rely. Gone are the days when innovation was defined by a new take on an investment sector. However, the fund industry remains behind the curve in understanding this new world in which innovation goes beyond new product ideas.
The product issue is still on the agenda in Europe, but it is framed in very different terms. In a world that is home to more than 35,000 funds, with distributors in the larger markets making selections from upwards of 5,000 products, it is hard to complain about lack of choice.
According to 400 or so distributor responses received by the Fund Buyer Focus survey to questions about desired industry innovation, only a handful mentioned the need for products in new asset classes. Those that did had requests that were both vague and ill-defined. The views of most distributors were well summarised by a Spanish discretionary adviser who said innovation was unnecessary. “Clients want simple things, not only in terms of products but in all aspects of the industry.”
In interviews conducted between January 1 and mid-April, most distributors called for a different approach to asset management: one is less defined by benchmark and sector than by outcome. According to a UK-based independent financial adviser: “Innovation needs to be around risk-adjusted returns … it’s all going to be focused on downside protection.”