The challenge of selling SRI and closed-end funds
Asset management has plenty of choice to offer investors, in terms of procedure, products, partners and processes. But alongside these factors, the investor must also examine the areas of product communication and distribution.
But can current, information-intensive products and socially responsible investment products, which need explanation, win the interest of investors in future? And what are their possible pitfalls?
Closed-end funds providers – an industry in turbulent times
Many closed-end investment funds find themselves to be in a ‘sales crisis’. There are some exceptions, such as in funds active in the area of solar and hydro-power, infrastructure.
There are indications that this field is becoming increasingly attractive to institutional investors.
The struggle in the arena of closed-end funds is that they have not always had the best reputation among investors.
The funds have an apparent perception among investors of having a ‘retail image’, maybe sold by people not fully qualified with the right financial background to equip them for the sales job.
The funds also do not have fee structures that could be described as ‘lean’.
There arise here some possible points of criticism. At this stage, one need not discuss whether these are just simple assumptions, or whether they are prejudices.
It is a fact that the ‘retail’ image does not make the distribution of SRI products in this area any easier, either.
Providers and investors often find it hard to get along. The areas of capital markets and asset management have grown closer together over time. One example is the Ucits format for hedge funds that has made its way into the classic mutual fund industry. The same thing applies for ETFs.
The trend of convergence between industry areas is well established – so why should it be otherwise for closed-end funds and SRI investments?
Retail vs. Institutional – with differences in product design, project management, technical administration, controlling, prospectus design, reporting, and fee structures are all small communications barriers, which make the basis of decision making for institutional investors more difficult.
The sphere of communication remains a major challenge for professionals in the areas of product management, marketing and sales.