Active managers axed if they underperform
The majority of Australian investors (84 per cent) have confidence in active management, while 75 cent of investors hold their assets in actively managed strategies, according to MFS' active management sentiment survey.
MFS Investment Management partnered with CoreData Research, which also found that although passive strategies had gained traction in recent years, active management remained an integral part of Australian's investments.
However, 68 per cent of survey respondents said they would search for a replacement manager after just one to three years of underperformance.
Seventy per cent of Australian investors also eyed performance track records over the past five year, when they hired external managers.
Notwithstanding that, half of the investors surveyed believed actively managed strategies were the best way to mitigate downside risk in a portfolio during bear markets.
MTS said data supported those views, as over the past 25 years, the top quartile of active managers managing global strategies added 7.6 per cent in excess returns in falling markets.
MFS' Australian institutional managing director, Marian Poirier, said: "When the current bull market in equities and bonds comes to an end, the need for capital preservation and risk management will be elevated".
Three quarters of Australians said they were ‘somewhat concerned' about a major drop in equity markets over the next 12 months.
More than half (56 per cent) of investors also indicated that protecting capital in down markets was one of the most important attributes when considering an active manager. The same number of respondents also said active management offered superior risk management, compared to passive investment options.
The survey collected the views of 845 respondents, including 220 were institutional investors, out of which 25 were Australian.
Recommended for you
Australian fund managers are actively seeking to launch Cayman versions of their funds to attract offshore flows, with Regal Partners set to launch its latest offering this month.
As private markets gain traction in Australia but only a limited pool of talent is available, three recruiters explore whether fund managers should consider looking overseas to find top talent.
With an explosion of private credit managers appearing in the market, two alternatives experts believe a consolidation is needed to maintain the quality of the sector.
Bentham Asset Management has become the latest fund manager to expand its distribution team as it reports increased interest in its credit strategies.
