What are fund buyer’s biggest gripes?

Hear from top buyers on what makes their blood boil and heart sing when being pitched. 

Panelists

1. Anders Karsbaek Bertramsen, Head of Alternative Investments & Manager Selection (AIMS), Director at Nordea
2. Neil Clare, Senior Analyst, FundQuest Advisor
3. Mia Söderberg, Manager, Asset Manager Selection, at Munich Re
4. Fabrizio Zumbo, Director, European Asset Management Research at Cerulli Associates
5. Veronique Morel-Kane, Senior Wealth Manager & Branch Principal at Raymond James

Executive summary

In this panel discussion the importance of considering a fund manager's credentials when selecting an investment, understanding where the risk is taken and what is driving the risk when evaluating a manager was emphasised. In particular, commitment to ESG principles and passion for the work are important credentials to look for.

The most relevant parameters that fund selectors and fund buyers are focusing on when scrutinising asset managers proposition in the mainstream and in alternative segment, what makes their blood boil coming from the title, is the importance of ESG credentials when scrutinising the value proposition of a third-party manager and the growing importance of brand in fund selection.

Key topics discussed

• The challenge of fewer funds being launched last year, but the average fund size being materially bigger.
• The need to consider a mix of elements when selecting funds for insurance purposes.
• The importance of brand and brand recognition in the asset management industry, and the similarities between qualitative subjects. Brand is additionally, important when it comes to sales.
• How ESG is becoming increasingly important to investors, and how managers who don't incorporate ESG principles into their investment approach will likely be at a disadvantage.
• The importance of due diligence when researching a brand or company, and how passion is an important factor to consider when gauging whether a candidate would be a good fit for a company.
• The differences between insurance companies and other types of investors, the importance of risk management for insurance companies, and the role of ESG in insurance company investment portfolios.
• The focus on climate change and how it impacts the way they select investments.
• The importance of access to the portfolio manager and the key elements or parameters that should be considered when evaluating mainstream third party fund managers.

Decisions

The panelists agreed that brand is important in the asset management industry, both in terms of sales and differentiation. They also noted that while brand can be a helpful indicator of quality, it is not always a reliable measure. Other important considerations include the manager's investment process, performance, and fees. They also discussed the trend of larger asset managers raising larger funds, and the challenges that smaller, less well-known managers face in attracting investors. In terms of selecting fund managers and asset managers, the panelists looked at various performance and risk measurements.

Interesting stats and moments

• In 2018, $12 trillion was invested in ESG funds globally, up from $10.5 trillion in 2017.
• Two years ago, only one out of three dollars of inflows went into ESG.

"We tend to work with smaller managers who do not have a lot of experience. We insourced an EM corporate bond manager without a track record, but they had a great composite that we believed they could manage the separate EM corporate strategies. We are pragmatic and rely less on historical track record and more on qualitative aspects of the manager. Finding smaller boutique managers is what makes our job exciting."

- Anders Karsbaek Bertramsen

"There are two interesting points here. First, Rome wasn't building a day. So, we are all in a journey, we really believe in it. But I've seen a lot of people not walking the talk sometimes and really exaggerating their ESG credentials."

- Fabrizio Zumbo

Some "aha" moments that are mentioned include the idea that companies sponsor events to build their brand, and that sometimes a brand means more when it resonates with expertise. It is also mentioned that smaller boutique managers tend to be more exciting to work with, and that there are a few differences between ESG and traditional investing. Additionally, the importance of insourcing managers with a good track record, and the importance of being pragmatic when making decisions was explored.

Finally, panelists left the audience with something to think about when they said it is interesting to think of things in terms of passion, rather than just because they think it will attract assets.

Watch the full session below:

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