Incisive Research: Generalists with performance preferred

Fund selectors in Italy strongly prefer managers focused on investment performance rather than customer service, and specialists rather than generalists, according to a survey carried out by Incisive Strategy Research & Consulting.

The fund selectors polled said they are also looking for innovative rather than traditional partners, with a disciplined rather than flexible investment process. They are also looking for managers focused on returns, rather than Environmental, Social and Governance factors.

Of the respondents, 40% said their clients hold, in total, more than €500 million in third-party funds sold by their institutions. Fund selectors expect this to increase in the next 12 months, while only a small proportion (7%) expect this to decrease.

Just over half of respondents (52%) do not hold any of these funds in ‘white-label’ products and only 9% hold more than 50% of their funds in this guise. Over two-third of respondents offer third-party funds for foreign equities and domestic bonds while under half offer it for domestic equities, cash/deposits and alternative assets.

Fund selectors consider the investment process and the financial strength and stability of their fund managers to be extremely important and they are very satisfied with their fund managers with regards to these characteristics. They are only moderately satisfied with the customer service received from their fund managers; but their level of satisfaction is equal to the importance they attribute to it.

In terms of asset classes, there is a clear trend in commodities and foreign equities, with 59% and 47% of respondents respectively expecting to increase their exposure to these asset classes. Conversely, cash/deposits are heading for net outflows with 29% of respondents expecting to decrease their exposure (20% expect to increase).

Only 14% of fund selectors said they made use of investment consultants to help with fund selection or monitoring, while 8% employ their services for all asset classes.

23% of fund selectors do not require a minimum track record of performance before they select a fund whereas 44% of fund selectors consider three years their minimum. However, among those that do require a minimum track record, 72% said they would overlook the requirement if the new fund is from a fund manager with an already proven track record.

The majority (72%) of fund selectors conduct a formal fund manager review every twelve months. Underperformance of its peer group over the previous 12 months and the departure of key managers are the main reasons for conducting an extraordinary review.

The survey is based on 71 qualifying responses from fund selectors working mainly in retail or private banks and asset management companies. The majority of respondents (61%) work for firms with more than €1bn of assets under management.


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