Asset managers need more tailored approach to fund selection criteria, says Cerulli report
Getting mutual funds on distributors' shelves has become more challenging for asset managers since the global financial crisis, with supermarket-shelf models embracing all funds being replaced by more calibrated approaches to fund selection by gatekeepers.
But asset managers largely do not appear to have caught up with this new dynamic in fund selection, according to Cerulli Associates' inaugural Asian Fund Selector 2014 report.
The publication covers research in Asia ex-Japan's largest mutual fund markets- China, Taiwan, Hong Kong, Korea, and Singapore.
"Asset managers have to move away from the 'one-size-fits-all' distribution approach to provide a tailored, focused strategy for each type of distributor to get on fund selectors' buy lists," says Shu Mei Chua, a senior analyst with Cerulli, who led the report.
All distributors, ranging from global banks to the smaller independent financial advisor firms, have different client needs, which means varying appetites for product strategies and different drivers of servicing support, Chua adds.
A key finding of Asian Fund Selector 2014 is that, apart from a common preference for strong fund performance, as well as branding and marketing support from asset managers, there was a surprising divergence in many other fund selection criteria between fund selectors and asset managers.
For instance, contrary to what asset managers Cerulli polled generally believe, fund selectors noted that poor fund performance does not equate to immediate removal from a distributor's buy list. In fact, fund selectors rank underperformance as the third most important criterion for a fund's removal, after inadequate risk control and lack of transparency.
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