Incisive Research: Austrian selectors opt for caution and predictability

Austrian fund selectors tend to be conservative and prefer the tried and tested to flashy presentations and detailed rather than over-frequent reporting, according to a survey by Incisive Strategy Research & Consulting.

The investment process should also be disciplined and straight-forward rather than too flexible or excessively rigorous. Overall, Austrian fund selectors prefer their fund managers to concentrate on the nitty gritty of investment performance rather than customer service.

They also prefer specialists and conservative managers who are established rather than up and coming.

The research was conducted in August and September 2011 via emails and telephone interviews. Some 237 fund selectors based in Austria were asked to participate and the results are based on 59 qualifying responses from selectors working mainly in retail or private banks and asset management companies.

More than two-thirds of respondents work for companies with over €1bn of assets under management. About a third of respondents said their clients hold, in total, more than €500m in third-party funds sold by their institutions and 59% of fund selectors do not expect this to increase in the next 12 months.

The fund selectors were asked how satisfied they were with the investment process, financial strength and stability, customer service and value for money of their fund managers and how important they considered these characteristics.

While all characteristics were considered important, financial strength and stability were considered as the most important.

Of the “softer” attributes required from an asset manager, expertise came top  and was the source of the greatest levels of satisfaction. The characteristics tested were expertise, innovation, fairness, helpfulness and social responsible.

Some 44% of respondents require a minimum three years track record of performance, though, 61% said they would overlook this requirement if a new fund is from a manager with an already proven track record. Around 21% of respondents said they do not require a minimum track record before selecting a fund.

Over two-thirds of fund selectors conduct a formal fund manager review every 12 months. An extraordinary review will be conducted if the fund has underperformed during the previous 12 months compared to its peer group or if key managers have left the fund.

Investment consultants are not very popular with 73% of respondents saying they do not employ consultants to help with fund selection or monitoring. Among those that do employ consultants, Morningstar and Deutsche Bank are the most used.

Among asset classes, commodities and hedge funds are growing in popularity with 47% and 40% respectively of selectors interviewed expecting to increase their exposure to these assets. Selectors expect to scale back their exposure to infrastructure and domestic equities.

To keep up to date with developments in the industry, selectors turn to monthly trade magazines seen as the most useful. For online and electronic media, fund selectors prefer email newsletters from the trade press.

Events such as conferences are considered useful to hear the views of asset managers. On average, selectors attended seven events organised by individual fund managers in the past 12 months, and 81% of respondents said they attended at least one of this type of event.

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