PLACE FINANCIÈRE & MARCHÉS — Fonds

Carte blanche – Alfi 2021

Reimagining the fund-distribution landscape



Chris Chancellor, senior director, Global Insights at Broadridge. (Photo: Broadridge)

Chris Chancellor, senior director, Global Insights at Broadridge. (Photo: Broadridge)

Over the past century, Europe’s mutual funds have blossomed from a seed of an idea into an industry managing almost €13trn. A complex distribution landscape has developed in tandem, adapting to changing tastes, regulations and innovations along the way. However, ingrained practices understandably take time to evolve. If the industry were to start over again, today, what might fund distribution look like?

Underpinning a reimagination of any industry is one word in particular: technology. Fund distribution has always been a people business, but technology is facilitating faster and broader connections and interactions – a role amplified by the societal lockdowns of Covid-19. Online platforms, robo-advisers and model portfolios would surely all make the cut in our ‘new’ industry, but a look at distribution trends in Asia Pacific could also be instructive. Live-streaming platforms allow managers to discuss products, interact with investors and offer investment discounts, while digital-wallet providers are moving into fund distribution via tie-ups with product providers.

Technology could also attract a new generation of investors. In our current reality, funds tend to appeal to older, more financially savvy demographics. There has been anecdotal evidence over the past year of younger investors turning to high-risk, high-reward investment strategies such as cryptocurrency, stock or FX trading. What if the asset management industry could present a more ‘exciting’ side, perhaps through the gamification of fund investing – or at least education – and partnerships with trendy brands and social-media influencers (within the bounds of regulation, of course)? Making fund investment more relevant and accessible to potential investors of any age and background can only be a good thing – helping them to put their cash holdings to more lucrative use, while also benefiting the region’s economy.

Personalisation is another major opportunity presented by the chance to start afresh with today’s resources. Not so much at product level, where efficiencies of scale need to be struck (although share classes and direct indexing are some measures that can help), but in terms of sales, marketing and client service. Targeting clients only with the information most pertinent to their profiles would help make sure to cut through asset managers’ messaging, and keep investors on side in this age of information overload. Speed is also of the essence here – we should use the opportunity of a new start to ensure clients are receiving reports and commentary on demand rather than at a time that suits the asset manager.