New report delivers wake-up call for active management industry
The active management industry must work harder in a number of critical areas to convince investors of its value proposition, according to a new report released today by Allianz Global Investors.
Report outlines what investors expect of their investment managers, and what managers must do to rebuild trust
While only 23% of investors surveyed believe active portfolios are worth the cost, only active managers can help deliver on their needs
Nearly 70% prefer fee structures that are aligned with performance
ESG investing, Alternatives, innovative risk approaches and disruptive technology identified as areas where active managers can generate value
9 April 2019: The active management industry must work harder in a number of critical areas to convince investors of its value proposition, according to a new report released today by Allianz Global Investors.
Incorporating the views of nearly 500 institutional investors from around the world with USD 15 trillion in Assets under Management¹, the report, ‘Staying Active: how to regain trust in active management’, outlines that while active managers are best placed to help investors overcome the challenges they themselves identify, overall confidence in active managers is low.
Of the global investors surveyed, less than a quarter (23%) said they thought active portfolios were worth the cost, with just 17% of respondents in the US agreeing. By contrast, 61% of investors said they thought active management was the best investment option when the underlying components of markets show little correlation and 71% said they thought active managers were best placed to capitalise on the investment opportunities presented by digital transformation.
While important, the report found that performance is not the only factor influencing investors’ choice of managers, with 48% saying it was one of their top 3 priorities in manager selection. The investors surveyed also expressed a clear preference for wide-ranging, long-term relationships with firms that understand their business goals and challenges (41%). They are also looking for managers to have the capabilities to evolve with their needs, which can result in benefits for both clients and managers (40%).
The report identifies 5 key areas where asset managers should focus on upgrading their services to win greater confidence and long-term commitment from investors.
Offer innovative risk approaches – less than half of the investors surveyed feel they have the appropriate tools/solutions to deal with tail risk
Facilitate ESG investing – 61% say active managers are better stewards than passive, but 60% are confused by different approaches to ESG. Nonetheless, 72% of institutions plan to manage all of their assets in an ESG-conscious way by 2030; nearly 2 in 5 (38%) plan to do so by 2025.
Inform investors on Alternatives – 45% are deterred by an overabundance of new products, with 61% saying they would allocate more to Alternatives if the strategies were clearer
Adopt technology to enhance client outcomes – 61% of institutional investors believe active managers are better able to capture market opportunities by taking advantage of AI and big data
Champion innovative fee models – 68% want fee structures that adjust with performance
Andreas Utermann, CEO of Allianz Global Investors, said:
“This report should serve as a wake-up call for those parts of the active asset management industry that have yet to grasp just how fundamentally our industry is changing. In today’s challenging market environment, active management is more relevant than ever. In fact, only active management can provide the type of tailored, bespoke solutions needed to meet many of the investor challenges identified in our report around disruptive technology, innovative fee models and ESG. But investment managers must maintain a laser focus on delivering for clients to be able to stand out and thrive in a crowded and consolidating market.”
Tobias Pross, Global Head of Distribution at Allianz Global Investors, said:
“The findings confirm what we hear from clients around the globe. By being close to them and listening carefully, we anticipated these growing client demands and started some years ago to invest into advisory capabilities and our digital client experience. We have also strengthened our value proposition by pioneering new approaches to integrating ESG, building a leading Alternatives franchise and innovating in fee models. As we continue to grow our offering, we will remain relentlessly focused on building long-term relationships with asset owners and ensuring our business is aligned with what they expect from us as a leading active investment manager.”
The report also asked investors about their top concerns for 2019, with 80% saying they were most worried by market volatility, 79% by monetary policy and 75% by inflation. Nearly 9 out of 10 (87%) of those surveyed said investors have become complacent in the decade since the financial crisis.
For further information please contact:
Alastair Fairbrother, Tel. +44 203 246 7432
Sarah Einig, Tel. +44 203 246 7846
Vivi McDuell, Tel. +44 203 246 7251 firstname.lastname@example.org
¹ The findings of ‘Staying Active: how to regain trust in active management’ are based on responses from 490 global institutional investors from across 13 markets, who together represent USD 15 trillion of Assets under Management. They were interviewed via a comprehensive global survey facilitated by Oxford Economics during November and December 2018.
The survey was fielded anonymously; AllianzGI did not specifically target its clients, although respondents may include clients.
About Allianz Global Investors
Allianz Global Investors is a leading active asset manager with over 730 investment professionals in 24 offices worldwide and managing more than EUR 500 billion in assets for individuals, families and institutions*.
Active is the most important word in our vocabulary. Active is how we create and share value with clients. We believe in solving, not selling, and in adding value beyond pure economic gain. We invest for the long term, employing our innovative investment expertise and global resources. Our goal is to ensure a superior experience for our clients, wherever they are based and whatever their investment needs.
Active is: Allianz Global Investors
* Data as at 31 December 2018
This survey involved 490 institutional investors in the following markets: US (70 respondents), UK (50), Germany (40), France (30), Italy (30), Switzerland (30), Nordics (30), Belgium (30), Netherlands (30), Middle East (30), Taiwan (30), Hong Kong (40) & Japan (50). Allianz Global Investors commissioned this research from Oxford Economics, who selected respondents across markets and institution types that reflect our client base. Respondents may include AllianzGI clients, but clients were not specifically targeted so any such overlap would be coincidental. The survey was fielded anonymously and was conducted in November and December 2018.
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.
AllianzGI appoints first Chief Sustainability Officer
Allianz Global Investors, one of the world’s leading active investment managers, has appointed its first Chief Sustainability Officer. Beatrix Anton-Groenemeyer, currently Global Head of Product Specialists for Fixed Income at AllianzGI, has assumed the new position with immediate effect. In her new role, Beatrix will report to Andreas Utermann, CEO of AllianzGI, underlining the importance of sustainability to AllianzGI.
Beatrix Anton-Groenemeyer appointed to newly created, senior position
Role reports directly to Chief Executive, emphasising importance of sustainability to AllianzGI and its clients