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April 19, 2019 at 04:18 PM
Professional fund buyers — researchers and analysts who select funds for insurers and funds of funds and recommend or choose funds for broker-dealer, private bank and trust company platforms — are likely to face a challenging year ahead, according to Natixis Investment Managers.
Uncertainty arises from a variety of sources: volatile equity and fixed-income markets, higher interest rates and trade and geopolitical tensions.
Natixis commissioned a survey to find out how they planned to deal with these challenges. Two hundred professional fund managers in 22 countries throughout North America, Continental Europe, the U.K., Latin America and the Middle East responded to a poll conducted by CoreData Research in October and November.
The survey results were gathered before the December market plunge, but even so professional fund buyers had reduced their long-term return assumptions to an average of 7.7% from the previous year’s 8.4%.
These were the main issues on respondents’ minds:
- Greater volatility in equities – 83%
- Higher interest rates – 78%
- Trade disputes – 78%
- Growing speculative bubbles – 75%
- An end to the U.S. bull market – 63%
Seventy-four percent of professional fund buyers in the survey said the current environment was favorable to active management. Indeed, some three in four portfolio investments are actively managed. Natixis said this meant that pro buyers strongly support the value added by top-quality fund managers.
Buyers expected active management to remain relatively constant into 2022. At present, 72% of allocations go to active investments, and in three years, 71% will do so.
