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Four critical calls for the 'seismic' shift in asset management

by Dylan Lobo on Jul 01, 2014 at 13:33

The EIU said creating higher alpha products is vital to compete with hedge fund managers, with fund firms also looking to take advantage of AIFMD and Ucits to expand their product reach into new territories.

Wagstaff highlighted how quality products can enable pricing power. 'Product differentiation is critical. Risk-adjusted, combined with a strong process and first class customer service and a strong brand, will differentiate and enable higher pricing.'

This differentiation is key for traditional asset managers as the competition from passive funds increases.

Vanguard's European head Thomas Rampulla underlines the challenges active managers facing in dealing with the passive onslaught. 

'Across all of our products, we're focused on providing the best possible quality at the lowest possible cost,' Rampulla said. 'By quality we mean tight tracking from our index funds, robust product design and first-class customer service and client communications.'

3) Pricing

While strong products may help asset managers justify the fees they charge, they remain under intense pressure to lower charges, both from gatekeepers and passives.

Some fund managers have introduced 'semi-active' funds to meet the passive challenge. This has been met with mixed success with Terry Smith's £1.6 billion Fundsmith Equity fund the poster boy of these strategies, while products from JP Morgan and Schroders have had much less success.

On more traditional products, some asset managers are seeking ways to create more variable pricing with platforms and clients and are seeking ways to introduce more sophisticated pricing by type and style of fund, product and distributor.

'Find platforms are not distinguishing between the type of client, but are trying to negotiate a single price across all their clients,' Rathbones chief executive office Mike Webb (pictured) said.  

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