An asset manager’s reputation is a more important factor in the first stage of the manager selection process

Key findings:

  • Organisations with a smaller AUM base are more inclined to put a higher value on a company’s reputation during the manager selection process
  • LinkedIn is by far the social media platform that is most widely used across all markets and all segments. In Germany, local-language professional media site Xing is also used regularly for professional purposes
  • Almost three quarters of respondents would consider reading sponsored editorial contenteven though they are aware of the potential bias, with German institutional investors being the most responsive to this

European institutional investors consider an asset manager’s reputation to be a more important selection factor when discarding unsuitable managers than when picking the winner from the short list, research by Fundamental Media has found. Organisations with a smaller AUM are also more inclined to put a higher value on a company’s reputation during the manager selection process.

The reputation of the asset management firm is also slightly more important to financial institutions and consultants in the first stage of manager selection (discarding unsuitable managers), while in the stage 2 (picking the winning manager) pension funds and non-profit organisations find this factor more important than financial institutions and consultants.

A manager’s ESG approach is a key differentiating factor in both stages, especially for Dutch respondents in stage 2 and for financial institutions and consultants. The size of the company is an important selection factor in stage 1 for French and Swiss institutional investors.

Performance/track record, strategy/investment process, investment team and fees are always the top selection criteria in both stages, regardless of the market or the segment analysed.

A green arrow indicates the factor has become more important in stage 2 compared to stage 1, whereas a red arrow indicates the factor is more important in stage 1

Between September 2019 and March 2020, Fundamental Research surveyed institutional investors in the Netherlands, the UK, Switzerland, the US, Germany and France about their views on global trends, asset manager communication, manager selection, their media consumption habits, and their top asset manager brands.

Social media usage

LinkedIn is by far the social media platform that is most widely used across all markets and all segments. In Germany, local-language professional media site Xing is also used regularly for professional purposes.

Overall, financial institutions and consultants as well as respondents managing a large AUM (over £/€ 10 billion) are more present on social media than pensions and non-profit organisations and respondents managing a small or medium AUM (up to £/€10 billion).

European institutional investors use social media primarily as an information and networking tool. Almost half of French, German and Dutch respondents use social media to read content from asset managers.

Other findings from the European Institutional Investor Research include:

  • Asset managers are overall considered to be the most reliable information source, but there are notable differences between markets and segments. British respondents and pension institutions and non-profit organisations tend to rely heavily on consultants and consultant ratings while French institutional investors have the highest reliance on financial media. 
  • Almost three quarters of respondents would consider reading sponsored editorial content even though they are aware of the potential bias, with German institutional investors being the most responsive to this.  
  • Among the prompted global trends, longevity and climate change are overall considered to be the most important by the respondents. The importance of these trends is reflected in the investment strategies as ESG/sustainable investing and liability-driven investing have the strongest growth potential. 
  • When it comes to fund ratings, institutional investors either do not use them or tend to use Morningstar. The use of fund ratings tends to be driven by French and German respondents while their British counterparts use them the least. Financial institutions and consultants tend to use fund ratings three times more than pension institutions and non-profit organisations. 

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