Fund distribution: Supply and demand mismatch

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From ETF’s to smart beta, fund distributors often struggle to connect their offering to the strategies demanded among selectors, the latest European Fund Sales Survey by accelerando associates revealed.

According to the survey, conducted among 60 senior sales executives, while 53% of the interviewed fund sales people stated that fund selectors consider smart beta concepts to be potentially interesting, 33% said that selectors have a rather skeptical view on smart beta.

Similarly, for multi-strategy funds, 60 % of senior sales people surveyed acknowledge that fund selectors Access these strategies very selectively, and 20% state that selectors are skeptical of multi strategy funds.

“With that, we witness a clear mismatch between product development trends and real demand from large fund selectors“ comments Philip Kalus, managing partner of accelerando associates.

For the ETF Industry, more than a third of respondents see the primary purpose of ETF’s in providing cheap core exposure and tactical plays, while only 14% of respondents see passives a threat to active funds.

The study also highlights the challenge of many funds selectors having high minimum requirements for target funds,  making it harder to complete the initial asset gathering stage. Kalus highlights collaboration among selectors, such as fund selector club deals as a possible solution, which tends to be more common in the alternative world.

This is certainly something asset managers should promote more. It is a win-win. Selectors can access new funds and emerging talents at an early stage and promoters gain sufficient size“ he states.