Staying active: how to regain
trust in active management



How do institutional investors view active asset management? How do they rate their managers’ ability to address their changing needs?


Those were among the questions we set out to explore when we commissioned Oxford Economics to survey 490 institutional investors globally in November and December 2018.

The case for active asset management always grows clearer towards the end of a market cycle. As volatility increases, gains are harder to come by, and the discomfort of riding a turbulent index can add to uncertainty about the future.

But while the majority of investors recognise the benefits of active management, many remain unconvinced that these benefits are worth their current cost – even as market conditions become more complex.

Our research explores why investors are sceptical. It also does something practical: by identifying where investors need support today, we show how asset managers can restore trust and make the case for active management. Below you can explore key takeaways from the research or you can download the full report.

Whatever capabilities active managers bring to the table, the question remains: does active management represent value for money?

Looking more closely at attitudes toward fees, we found that 68% of survey respondents think their institution would prefer fee structures that adjust when performance fluctuates.

Nearly three-fifths would switch to managers who offer better aligned fee structures.

It is important to note, however, that fees are considerably less important than other factors in the investor-manager relationship. Asked to list their priorities when choosing managers, just 6% of survey respondents cite fees among the top three.

Chart 5 - Delivering value
               Source: Allianz Global Investors 2019 Institutional Investor Survey

These results suggest that investors do not confuse value with cost, and are willing to pay for service that brings them clear benefits. For active managers, then, one way to gain client trust is by ensuring that fees fairly and consistently reflect their contributions – including new fee models that align cost with performance.



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Study methodology

  • Allianz Global Investors commissioned Oxford Economics to conduct telephone surveys of 490 institutional investors, including insurers, public and private pension plans, sovereign wealth funds, family offices, foundations, endowments and banks, in 13 markets worldwide.
  • Oxford Economics selected respondents across markets and institution types that reflect our client base. Respondents represent total assets under management exceeding USD 15 trillion.
  • Respondents may include Allianz Global Investors clients, but clients were not specifically targeted so any such overlap would be coincidental.
  • The survey was fielded anonymously in November and December 2018. The 490 respondents were split as follows:

Region AuM
Europe 56%   USD 100 billion – USD 500 billion  17%
Asia Pacific 24%   USD 25 billion – USD 99.9 billion  16%
US 14%   USD 10 billion – USD 24.9 billion  10%
Middle East 6%   USD 5 billion – USD 9.9 billion  8%
      USD 1 billion – USD 4.9 billion  15%
      USD 500 million – USD 999 million  20%
      < USD 500 million   14%
 

Investing involves risk. The value of an investment and the income from it will fluctuate and investors may not get back the principal invested. Environmental, social and governance (ESG) strategies consider factors beyond traditional financial information to select securities or eliminate exposure which could result in relative investment performance deviating from other strategies or broad market benchmarks. Diversification does not ensure a profit or protect against a loss. Past performance is not indicative of future performance. This is a marketing communication. It is for informational purposes only. This document does not constitute investment advice or a recommendation to buy, sell or hold any security and shall not be deemed an offer to sell or a solicitation of an offer to buy any security.

The views and opinions expressed herein, which are subject to change without notice, are those of the issuer or its affiliated companies at the time of publication. Certain data used are derived from various sources believed to be reliable, but the accuracy or completeness of the data is not guaranteed and no liability is assumed for any direct or consequential losses arising from their use. The duplication, publication, extraction or transmission of the contents, irrespective of the form, is not permitted. This material has not been reviewed by any regulatory authorities. In mainland China, it is used only as supporting material to the offshore investment products offered by commercial banks under the Qualified Domestic Institutional Investors scheme pursuant to applicable rules and regulations.

This document is being distributed by the following Allianz Global Investors companies: Allianz Global Investors U.S. LLC, an investment adviser registered with the U.S. Securities and Exchange Commission; Allianz Global Investors Distributors LLC, distributor registered with FINRA, is affiliated with Allianz Global Investors U.S. LLC; Allianz Global Investors GmbH, an investment company in Germany, authorized by the German Bundesanstalt für Finanzdienstleistungsaufsicht (BaFin); Allianz Global Investors (Schweiz) AG, licensed by FINMA (www.finma.ch) for distribution and by OAKBV (Oberaufsichtskommission berufliche Vorsorge) for asset management related to occupational pensions in Switzerland; Allianz Global Investors Asia Pacific Ltd., licensed by the Hong Kong Securities and Futures Commission; Allianz Global Investors Singapore Ltd., regulated by the Monetary Authority of Singapore [Company Registration No. 199907169Z]; Allianz Global Investors Japan Co., Ltd., registered in Japan as a Financial Instruments Business Operator [Registered No. The Director of Kanto Local Finance Bureau (Financial Instruments Business Operator), No. 424, Member of Japan Investment Advisers Association and Investment Trust Association, Japan];and Allianz Global Investors Taiwan Ltd., licensed by Financial Supervisory Commission in Taiwan.

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