Fund managers told to go direct to investors

New research has pointed to fund managers having a golden opportunity to open more direct channels to investors looking to deal with greater market uncertainty via portfolio diversification.

The latest research from Investment Trends has pointed to the fact that investor interest in managed funds is growing and asserting that “a strong direct channel capability is vital to converting this demand.”

The analysis is contained in the Investment Trends 2017 Investor Product Needs Report which the company describes as being “an in-depth study of Australians’ investing behaviour and their use of various investment products.”

Investment Trends Senior Analyst King Loong Choi pointed to the manner in which the survey had revealed that investor appetite for growth-oriented investments was returning despite their current bearish market outlook with many looking to steer clear of the complex decision-making process via the use of managed funds.

“Aside from the threat of another global financial crisis, investors most often see investment selection as a challenge in the coming year,” he said. But importantly, the vast majority (84 per cent) agree that it is important for their portfolio to be well diversified across different investment types.”

“Investors understand the need for a diversified portfolio, but they feel that achieving this outcome is not always easy,” Choi said and suggested that it would be the product providers that best assisted investors with their desire for diversification who would stand out.”

He said that investor appetite for a range of investment products could be even higher, with two in five of those survey saying they found it difficult to access certain investments.

“Right now, international shares is the largest gap, followed by private equity funds, private business/venture capital and commercial property,” Choi said.

The Investment Trends analysis said the growing interest in managed funds was being buoyed by investors’ desire for diversification across asset classes, the perceived ease of not having to select individual stocks, and the access to a range of investment strategies that managed funds provided

It said that, at present, over half of potential managed fund investors (55 per cent) said they would prefer to invest directly with the fund manager, through their online broker, or the ASX mFunds service.

“Fund managers have a golden opportunity to meet this growing demand by facilitating easier access to their product suite,” said Choi.