We have released the results of our tenth annual fund manager insights survey and the results show that when it comes to the thoughts of managers, while some things have remained the same over the last decade, others have changed, both gradually and, in some cases, more sharply over the last year.
We began this survey of fund managers in 2014 as part of our annual Manager Dialogue. The survey collects responses in relation to asset owners, asset consultants and the asset managers themselves, and also asks for ‘informal’ predictions on market performance for the year ahead. We included our own staff in the survey the following year and have since built a body of results that now provide not only a comparison between the two groups, but also a comparison with how responses have changed over time.
Our Director of Marketing and Business Development, Wayne Sullivan, who has administered the survey over this time, thinks this year’s results provide an interesting reflection on a decade of change and challenge for both managers and consultants.
“Since we started our survey the number of superannuation funds has halved and their funds under management has almost doubled. While there are some areas that have remained steady over time, there are two primary factors that appear to have shifted sentiment of asset managers, and to a lesser extent consultants, when it comes to superannuation investors in particular. Perhaps unsurprisingly, those factors are consolidation and internalisation”, said Wayne.
Our analysis shows a shift over time in where managers see the most influence within funds when it comes to investment decision making. At the start of the survey in 2014 managers ranked CIOs as the most influential party within funds, ahead of internal teams. However, this view has been declining with these two parties trading places in roughly the same proportions. CIOs have moved from a high of 52% of managers’ nomination as “most influential” in 2017, when internal teams were the pick of just 27%, to now lag their own teams 32% to 48%. By comparison, our consultants have not changed their view materially over this time.
When it comes to the impact of internal teams there has been a marked jump over the last year for support of the statement that internal teams are best placed to research investments for their fund with 39% of managers choosing this notion from five available options. This has almost doubled since last year taking ground from the premise that internal teams will improve culture and are a major, but additive, cost.
Wayne thinks there is now an acceptance from managers of the role internal teams play.
“In 2014, far fewer funds had strong internal capability and those that did had much smaller teams. So at that time, managers were responding to how internal teams might develop. The question is now being answered from actual experience and managers have had to adapt and accept the changing dynamic over this time.
“That said, there are a growing number, now around 30%, that have a primarily negative view around the impact on culture and costs when it comes to internal teams. Perhaps those managers are taking more time to adjust”, Wayne said.
When asked to nominate the strongest headwinds to the growth of their businesses, the internalisation of managing investments has now almost edged out consolidation as the primary concern for managers. Consolidation has fallen from being the choice of 49% of respondents in 2022, to a much lower 29% this year, perhaps reflecting a view that the worst of that challenge for managers is now largely behind them.
The survey also explores attitudes to fees with both managers and Frontier contending that super funds are more fee sensitive than other investors, such as insurers, charities and family offices.
When it comes to issues asset owners are most likely to be concerned about, while both Frontier and managers nominated the threat of recession and inflation as key, Frontier had a much stronger sense around the challenge of valuing private market assets, than our asset managing respondents.
We think that while there have been many trends building over time, the last year has produced some stronger shifts and seen some areas ‘tip over’ in significance.
“Viewed incrementally, year on year, we have generally seen some shifts in sentiment across the board that build up over time. But this year, there seems to be a shift in accepting the influence and role of internal teams, and often of teams within those teams”, said Wayne.
