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Communications essential when performance lags

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Communication with institutional investors during times of underperformance is the key to preserving a mandate according to research by CoreData.

Some 77 out of 100 professional investors surveyed, say the importance of direct, regular contact with the fund manager increases when a manager is underperforming

Seven in 10 managers feel having a proactive client relationship manager also becomes more important at this time, while 66% think communications related to specific market events take on added weight.

Some 85% of managers want to see communication from fund managers when market events threaten to impact performance.

Craig Phillips, head of international, CoreData Research says: “Our study suggests that when performance hits a rough patch, the ability of asset managers to communicate effectively and regularly with institutional investors could mean the difference between retaining and losing clients.

“It is telling that these human interaction elements do not take overall priority. This suggests institutional investors do not necessarily value this side of their service experience until they need it.

“However, strong relationships are not built overnight and therefore fund management companies need to nurture their clients and create dialogue during the benign times. This will allow them to call upon those well-trodden channels if and when a portfolio hits a few speedbumps. If the communication is lacking, there is a higher possibility for the mandate to be terminated sooner when performance suffers,” he adds.

The study, which asked institutions about the service provided by asset managers, also found 89% of investors agree the role of the client relationship manager becomes more important when performance is suffering or when the market cycle is unfavourable to a manager’s style.

Overall, a robust investment process and philosophy (91%) is deemed the most important factor in the asset management relationship, followed by investment professionals with long tenure (76%). The third most important attribute in the relationship is detailed knowledge of investor objectives and portfolios (75%).

Core Data Research gathered view on active investing and the service elements provided by asset managers from 100 professional investors in the USA, UK, Europe, Middle East and Africa and Asia including Australia during July 2019.



Part of the Mark Allen Group.