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April 01, 2008 at 04:00 AM
Mutual funds have long been the investment vehicle of choice for many investors and financial advisors, but changing times may be on the way. A new study suggests mutual funds will experience a sharp decline within advisors’ product selections on behalf of clients.
According to Cogent Research, fewer than two advisors out of 10 anticipate increasing their use of open-end mutual funds in the future. As a result, the firm projects, the mutual fund share of the product pie will drop from 35 percent to 31 percent.
The firm’s study, called the “Advisor Product Forecast,” concludes that the biggest beneficiaries of these trends will be ETFs and separately managed accounts (SMAs).
The study is built upon a detailed channel-by-channel survey of advisors, providing data beginning with where advisors are currently directing assets under management and where they expect to be two years from now, along with a product map showing where they intend to allocate new money.
“Advisors are in a unique position to not only observe and evaluate trends in asset management products and accounts, but also to gauge their clients’ evolving receptivity to traditional versus new investment options,” states Bruce Harrington, managing director, Cogent Research. “As a result, the actions of advisors show a marked, definitive shift in product selection in the coming two years.”
