Submit A Question
Q: What technologies are having the greatest impact on sales and distribution?
A: Given the magnitude that technology continues to play within the financial services industry, FUSE fielded a survey earlier this year to specifically determine the technological impact on the sales process of investment products. Survey respondents rated how certain technologies will impact sales and distribution over the next three years. On average, survey respondents stated that tablets would have the most impact on sales over the next few years. In fact, nearly 30% said they will change the face of sales forever. More than half (57%) of survey respondents provide tablets to sales/distribution personnel. Also, larger firms have adopted the use of tablets at a faster pace than smaller firms, in addition to firms with a retail focus compared to firms with an institutional focus. Cloud computing was ranked second for having the greatest impact on sales and distribution over the next three years. Cloud computing has become an emerging theme that is gaining investor attention. Forrester Research projected total public cloud revenues to rise 27% annually to nearly $160 billion in 2020, up from $15 billion in 2010. IDC also predicted that while global IT spending increased by 6% in 2011, spending on public cloud computing services will grow five times faster.
Q: Will the ETF industry maintain its momentum moving forward?
A: We do see ample opportunities for the industry to expand; however, the pace at which ETFs are bringing in new assets is no longer growing at the clip that we’ve seen in past years. In fact, AllianceBernstein recently forecasted that the $1.1 trillion U.S. ETF market will grow by a compounded annual rate of 13%, hitting $6 trillion by 2025, far below expectations of a $10 trillion industry by 2025. In terms of actively managed ETFs, the industry hit a recent roadblock with the SEC’s rejection of Huntington’s request to convert an open-end fund to an ETF. Had Huntington received the green light, we expected other firms to follow its lead. As noted in Barron’s, Citigroup reported that it is getting more difficult for new fund companies to stand out. The ETF industry remains highly concentrated—the top 10 ETF providers account for 95% of AUM. Also, the article highlights that new products account for 2% of industry ETF growth so far this year, down from 6.4% last year.
1) Goldman Sachs Asset Management Launches First Closed-End Fund
Business Wire | 11/26/2013
Because… The IPO of Goldman’s first closed-end fund is the sixth largest this year and the third largest among those focusing exclusively on MLPs. There were 24 closed-end fund IPOs in 2013 as of the end of November, already surpassing last year’s total of 22. MLPs are a popular asset class in the closed-end fund space because the closed-end structure has a relatively stable asset base, which allows portfolio managers to invest in securities with less liquidity.
2) Global X Funds Lists Three ETFs On Colombian Stock Exchange
PR Newswire | 11/26/2013
Because… There were only 38 exchange-traded products listed in Latin America with total assets of $11.5 billion at the end of October, according to BlackRock. While Global X may have the first-mover advantage in Colombia, other ETF issuers need to take a cautious approach if they plan to explore new distribution opportunities in the region. Firms should have a good understanding of local rules and regulations concerning listing procedures and reporting requirements, conduct research on local investors’ preferences as well as the competitive landscape, and provide adequate marketing support to get funds proper exposure.
3) Allstate Launches Emerging Manager Program
PR Newswire | 12/3/2013
Because… Emerging manager programs have been developed or expanded by a growing number of institutional investors, such as pensions, endowments, investment consultants, multi-manager fund sponsors, and asset allocation funds with alternative sleeves. The definition of emerging managers varies. It is sometimes applied to women- or minority-owned firms with a high degree of employee ownership. Many studies have shown that these smaller investment managers tend to deliver better performance compared with their more-established counterparts.
1) 401(k) Participants Expect to Slow Retirement Savings – Mercer Workplace Survey
Mercer | 11/19/2013
Because…The inability and unwillingness on the part of 401(k) plan participants to save more for the future is worrisome. When providing education for employees on their retirement readiness, plan sponsors should point out that saving for retirement doesn’t necessarily come into conflict with other financial needs. Budgeting for retirement savings is also critical. As everyone has to address special financial considerations throughout different life stages, creating a budget to identify available sources for savings will help people save in a more systematic, disciplined, and structured manner.
2) American Century Investments Rolls Out New Retirement Plan Assessment Tool
American Century | 11/19/2013
Because…As asset managers are competing for DCIO business, they are contemplating the most effective approaches to stand out from peers. American Century’s new tool can expose key areas of improvement so that retirement plan advisors and sponsors can search solutions to enhance plan effectiveness. Meanwhile, the delivery of analytical tools is just one way of supporting plan advisors and sponsors. DCIO managers also need to combine quantitative analysis with qualitative evaluation to provide ongoing value.
3) JP Morgan to Launch a Multi-Manager Alternatives Fund
SEC Filings | 11/22/2013
Because… The filing did not disclose the names of sub-advisors, but we have found that tapping multiple sub-advisors to manage alternative funds has become an emerging trend in the fund world. Firms that offer multi-manager funds should put a special emphasis on portfolio managers’ expertise in screening sub-advisors because alternative fund managers generally have greater flexibility in investment approaches. They do not focus on the comparison with a benchmark, which can lead to the wide dispersion of returns among fund managers. Therefore, manager selection plays a pivotal role in a fund’s success.
1) RS Investment to Launch the Emerging Markets Small Cap Fund
SEC Filings | 11/15/2013
Because… Besides RS Investment, American Century introduced the Emerging Markets Value Fund on 10/31/13. With asset management firms accelerating the launch of emerging markets funds, Emerging Markets is no longer a niche asset class. Asset managers, who are not content with broad market-based funds, are increasingly slicing and dicing emerging markets. By targeting specific sectors, market caps, or investment styles, these funds enable investors to tailor the emerging markets exposure to their portfolio construction needs. While more fund firms will develop such products, this group of funds, with a narrower investment universe, usually carries a higher level of risks.
2) Acquisition and Strategic Relationship with Lloyds Banking Group
Aberdeen | 11/18/2013
Because…Aberdeen’s purchase of Scottish Widows Investment Partnership will turn the firm into Europe’s largest publicly traded money manager. The fact that Aberdeen resorted to the acquisition once again as it has done quite a few times in the past decade shows that asset managers are eager to grow their size to achieve economy of scale and become more diversified to weather various market cycles. Meanwhile, regulatory requirements and the Eurozone crisis have prompted many European banks to consider divesting non-core business segments, which provides great opportunities for investment managers to expand their presence.
3) Russell Investments to Acquire On-Line Partnership Network
Citywire | 11/19/2013
Because… In addition to Russell’s and Aberdeen’s (see above) deals, Henderson Global Investors
has announced its purchase of the alternative investment manager H3 Global Advisors. These transactions suggest M&A activities around the globe are picking up toward the end of the year. Asset managers are actively seeking opportunities to broaden their product distribution or strengthen their investment capabilities in areas where they do not possess in-house expertise. However, deals may fall through because of divergent expectations between buyers and sellers, as in the case of Crestview’s failed sale of Munder Capital
Total estimated inflows to long-term mutual funds were $6.06 billion for the week ending Wednesday, November 6, according to the Investment Company Institute (ICI). This cumulative intake represents a 7% increase from the prior week’s sales. Stock fund experienced its fourth consecutive week of inflows with Domestic Equity gathering $5.4 billion and World Equity capturing $3.6 billion. Although Hybrid funds collected nearly $1.4 billion in net inflows, it was a decline of 35% from the prior week. Bond funds remained in the red with $4.3 billion in net outflows, on par with its redemptions from the prior week. Taxable Bond suffered $3.5 billion while Municipal Bond experienced $833 million in net outflows.
Source: Investment Company Institute (ICI)
1) Gross Loses World’s Largest Mutual Fund Title to Vanguard
Bloomberg | 11/4/2013
Because… We hope the widespread press coverage on which fund is the world’s largest will not sway investors’ decisions. Investors should be advised to invest their assets based on their own needs. Performance chasing and asset class rotation can be primary reasons behind the asset shift. PIMCO Total Return Fund produced negative YTD and one-year returns as of 10/31/13, although it still managed to beat its benchmark – Barclays U.S. Aggregate Index – for all time periods. On the other hand, Vanguard Total Stock Market Index Fund (Investor shares) generated returns of 26.29% for YTD as of 10/31/13 and 28.74% for one year.
2) Fidelity Labs Experiments With Online Game to Educate Investors
Fidelity | 11/6/2013
Because… Engaging, fun, and interactive games are rarely associated with investor education. Money management is always a serious topic, and most financial education programs follow the traditional approach of having investment experts give lectures. However, we have recently seen more firms are experimenting with “edutainment,” marrying entertainment and financial learning to pique people’s interest. With the goal of bringing back investors, developing innovative and interesting games can also enhance brand awareness and differentiate a firm from its competition.
3) AllianceBernstein to Introduce the Floating Rate Strategies Fund
SEC Filings | 11/8/2013
Because… Fund firms are increasingly rolling out floating rate funds to help investors hedge against rising rates. Besides AllianceBernstein, SSgA also filed for a floating rate ETF
last Friday. As the best-selling category for the most recent quarter, YTD, and past one year, floating rate mutual funds garnered $21.1 billion in 3Q13, $51.5 billion this year through September, and $57.5 billion over the past 12 months. Investors are flocking to these funds as they tend to outperform fixed rate bond funds in a rising rate environment. Floating rate loans can also provide portfolio diversification because they generally have a low correlation to other fixed-income sectors.
|Total estimated inflows to long-term mutual funds were $13.54
billion for the week ending Wednesday, October 23, according to the Investment Company Institute (ICI). Investors poured nearly $9.2 billion into Domestic Equity reportedly on expectations the Federal Reserve would keep its easy money policies intact into 2014. World Equity garnered almost $4.4 billion followed by Hybrid fund’s intake of $2.3 billion. Bond funds, on the other hand, remained in negative territory. Taxable Bond suffered $1.3 billion in net outflows while Municipal Bond experienced $1.0 billion in redemptions.
Source: Investment Company Institute
|Long-term mutual funds experienced outflows of $2.16 billion
for the week ending Wednesday, October 16, according to the Investment Company Institute (ICI). Bond funds continue the battle with Taxable Bond experiencing nearly $3.9 billion in redemptions and $1.8 billion in net outflows for Municipal Bond. Meanwhile, Domestic Equity managed to reverse the tides and posted inflows of $839 million compared with outflows of $5.2 billion during the prior week. World Equity continues to lead sales, gathering nearly $2.1 billion in net inflows. Hybrid funds accumulated $618 million, up from $191 million during the prior week.
Source: Investment Company Institute
1) Schwab ETF OneSource Expands to Offer More Than 120 Commission-Free ETFs
Schwab | 10/16/2013
Because… As the largest platform with the most commission-free ETFs, Schwab ETF OneSource has attracted greater investor attention. The decision of putting more funds onto ETF OneSource shows that ETF providers are satisfied with the flows their ETFs have gathered from the platform. On the other hand, the latest additions come from ETF managers that are already on the platform. If Schwab can consistently help less popular ETFs capture new assets, more ETF sponsors could be tempted to jump on the bandwagon.
2) Vanguard Increases Access to Admiral Shares to Bring Lower Costs to More Clients
Vanguard | 10/16/2013
Because…By gradually phasing out Signal Shares and eliminating Admiral Share minimums, Vanguard is simplifying its pricing structure and making Admiral Shares more widely available. The easier accessibility to the ultra-low-cost share class means investors have to compare advantages and disadvantages of mutual funds and their ETF counterparts and make final choices based on their real needs and personal situation. In Vanguard’s case, expense ratios of different product vehicles are no longer the key to investment decisions.
3) JP Morgan Files for the Global Equity ETF
SEC Filings | 10/21/2013
Because… JP Morgan, this year’s fourth best-selling fund family through the end of September, is preparing for an enhanced-index ETF. While the firm did not disclose the index the fund will be tracking, it did state in the filing that securities will be “selected for their specific investment characteristics based on a multi-factor investment selection process,” such as attractive relative valuation, positive price momentum, low volatility, and specific market capitalization. Whether this new ETF can gain traction will depend on its expense ratio and its ability to produce market-beating returns.
= other's ratings
= your ratings
= average rating