The time has come to offer investors a fairer deal and drop the fixed fees set by funds and replace them with performance-based charging, Morningstar’s head of global manager research Jeffrey Ptak has said.
As passive products increase their market share among emerging market funds, active fund managers must outperform to justify their fees, argues a report by Cerulli Associates.
It was a bad time to be an active manager in 2016, the year of Brexit and Trump, with underperformance plaguing funds as passives tracked the market higher and higher.
The active funds industry must shrink, cut prices, better-align itself with investors and differentiate if it wants to compete against a passive onslaught, according to a report by Morningstar.
A clear majority of UK active equity funds are not closet trackers and should not be tarred with that brush by the regulator, new analysis of the UK fund market suggests.
Passive funds have performed strongly in recent years, benefitting from relatively low volatility and more accommodative monetary policy in most developed economies, says David Macdonald, VAM Funds’sales and marketing director.
Fewer than half of all UK equity funds manage to survive longer than 10 years, according to the latest research from ratings agency S&P.
Stefan Lecher, the new head of client portfolio management for Asia-Pacific at UBS Wealth Management in Hong Kong, said unconstrained managers have the best chance to excel.
UK wealth manager Tilney for Intermediaries is planning to launch a new range of ‘risk graded, low cost multi-asset funds’ in the first quarter of 2017.
Benchmarks are a vital part of the asset management sector. Funds are measured against them, bonuses worked out in relation to them and entire sectors of the industry predicated upon them. But, if recent trends are extrapolated outwards, the days of the benchmark in its current form should be numbered.
The FCA has criticised the “weak price competition” among asset managers, attacking actively managed funds for failing to outperform their benchmark once fees have been taken into account.
As the market reacts to the UK’s shock decision to leave the EU, active managers are underperforming their passive peers when it comes to UK equities.
