Yield-hunt one of few goals uniting retail and institutional buyers, finds Cerulli Associates

European fund sellers seem to be using fixed income products to gain entry to both retail and institutional buyers – slaking their shared thirst for yield – but the distributors are then unveiling very different kinds of strategies, depending on the client type.

Some 29.4% of respondents replying to a recent qualitative survey of 14 pan-European fund groups by researchers at Cerulli Associates said fixed income products were among the two most popular types of products they used to target retail buyers, while 36.6% said the same was true when approaching institutional buyers.

This made fixed income comfortably the most popular response, in regard to both buyer segments.

But after that, the product set wheeled out was very different for retail, and institutional, investors.

Some 23.5% of product sellers said multi-asset was the first or second most popular fund type they used to target retail buyers.

A host of managers have launched multi-asset portfolios on the back of their popularity as a tool to spread risk, and put asset allocation in the hands of the manager.

But multi-asset did not figure among the seven most popular strategies when targeting institutional buyers.

Absolute return products were used prominently over twice as frequently when targeting retail buyers (23.5%) as when targeting institutional buyers (10.5%).

Retail buyers’ desire not to lose money was also shown by the use of guaranteed funds by distributors in 11.8% of cases. Such product types were not mentioned when distributing to institutions.

Retail buyers also seemed less willing than institutions (11.8% versus 21.1%) to ‘buy risk’ via equity funds.

However, institutional buyers might be expressing their own cautious attitude to risk through a willingness to consider volatility products, which were used to target them in 15.8% of cases.

Other strategies used to lure Europe’s institutional investors included inflation-linked, alternatives, and money market products (5.3% in each case).

rs may note that both institutional and retail investors are rotating out of long-only positions, and into long/short strategies.

“The accent is on active management,” said Barbara Wall, a director at Cerulli Associates. “We do not anticipate seeing a whole host of global fund brands jumping into the ETF space.”


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