Industry commentator Paul Resnik thinks that listed investment companies (LICs) will be the darling of the product scene, with the industry already seeing an increase in the number and usage of LICs.
Among these are the recently listed van Eyk Three Pillars, LICs from Clime Asset Management and Wilson Leaders, both to list in early February, and Contango Asset Management’s MicroCap LIC.
“That is probably the first part of a shift away from managed funds in the traditional sense,” Resnik says, attributing this move to a “level of frustration” with fund managers.
Resnik believes there will also be a corresponding increase in interest in individually managed accounts (IMAs), partly driven by a drop in prices.
“I think the marketplace is almost going to polarise — at one end it will atomise further into LICs and other opportunities, and at the other end there will be clearly things like theColonial FirstChoiceproduct, where planners take the view they are not going to add value to product selection, and they’ll take those solutions,” Resnik says.
Deutsche Asset Managementhead of retail distribution Bruce Murphy andBrillient!director Graham Rich both agree that LICs will garner significant interest in the market this year, with Murphy also favouring products with an absolute return focus.
Hedged international share funds and investments were highlighted by Rich and Bridges technical and research head Justin McLaughlin as an area to watch, too.
Advance Asset Managementmanaging director Kate Mulligan is expecting some more variety and “spice” from the market.
“We think advisers will be looking for something that is a little different or new, as fund managers’ offerings are becoming increasingly similar,” Mulligan says.
“There will continue to be a fascination with absolute return and variations on familiar products such as high yield fixed income products, as advisers seek to provide alpha to their clients,” she says.
“There is a definite place for these products in the market, both in multi-fund offerings to add a performance kicker and as stand-alone offerings, provided in these last cases they are appropriately matched to the risk profile of the client.”
