Incisive Research: Swiss selectors prefer performance to customer service

Swiss fund selectors strongly prefer partners focused on investment performance rather than customer service, with a disciplined rather than flexible investment process and specialists rather than generalists, according to a study released from Incisive Strategy, Incisive Media’s research arm.

A report polled 622 fund selectors based in Switzerland, working mainly in private banks and asset management companies. Over 70% of respondents work for firms with over €1 billion of assets under management.

The finding show fund buyers are also looking for conservative rather than aggressive managers and for detailed rather than frequent reporting.

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.

Financial strength and stability was considered the most important and fund selectors are very satisfied with their managers in this regard (albeit their level of satisfaction is lower than the importance attributed to it). Customer service is considered to be only moderately important and the level of satisfaction with fund managers in this regard is higher than the importance attributed to it.

With regards to “softer” attributes, expertise is considered the most important among the characteristics tested, as well as the one which experienced the greatest levels of satisfaction. Fund selectors are satisfied with their managers’ fairness and helpfulness but they consider these characteristics to be only moderately important.

Half the selectors polled use a minimum of three years track record of performance before selecting a fund, while over a quarter do not require a minimum track record. Among those that do, 88% said they would overlook their minimum requirement if the new fund is from a fund manager with a proven track record.

Most Swiss 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 manager review.

The research revealed that three-quarters of those who responded do not employ services of investment consultants to help with fund selection or monitoring, while 13% employ their services for all asset classes.

Nearly half of respondents said their clients hold, in total, more than €1bn in third-party funds sold by their institutions and a significant minority of fund selectors expect this to increase in the coming year. Almost half of respondents do not hold any fund in ‘white-label’ products, whereas only 3% hold all their funds in this way. Over three-quarters of fund selectors offer third-party funds for foreign and domestic equities and domestic bonds.

Regarding asset classes, those polled consider that foreign and domestic equities are heading for net inflows, with 44% and 38% of fund selectors respectively expecting to increase their exposure to these asset classes. They are expecting to scale back their exposure to cash/deposits, private equity and hedge funds.


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