Asked which investment strategy will contribute most to their business growth, two thirds of the 300 global asset managers interviewed for the study think multi-asset solutions are the main asset class to drive total assets under management. This is four times more than actively managed equity funds, which come in second with just 17% of the vote.
Passive strategies, which were considered a main driver of AUM growth during the past couple of years, now only account for a meagre 4.3% of the vote.
Steady appetite
Asked about the main drivers behind the focus on multi-asset solutions for future growth, State Street’s Head of Asset Management Solutions, said: “Retail investors are becoming more focused on the absolute return of their investments, which fits well with multi-asset solutions.”
The implementation of MiFID II, scheduled for the coming years, might also boost multi-asset funds as the EU Directive seeks to decouple investment products and advice, making retail investors pay for advice separately. This might prove too costly for the bulk of them, forcing small investors into multi-asset solutions.
Absolute return appetite: Pan-European average 2011-2014
Meanwhile, appetite for absolute return products among European fund selectors has been among the most robust of all asset classes, with an average of four in ten fund buyers consistently saying they will step up allocation to the asset class for the past four years.
Industry overhaul?
The strong focus on multi-asset solutions reflects a wider belief among asset managers that the industry is on the eve of a major overhaul, with an increasing client focus on absolute return causing a fundamental shift in overall business strategy. Roughly three quarters of asset managers think few of their peers are equipped to offer multi-asset class solutions as most of them lack genuine multi-asset and portfolio construction teams, with most analysts and portfolio managers focusing on a single asset class.
