Investors value performance, information transparency and unbiased advice the most, but these areas are perceived as asset managers’ weakest points, the Financial Times reports, referring to research by State Street’s Center for Applied Research.
A total of 2,700 investors were asked to single out the factors they valued the most from a 12-strong "wish list." Of the three most popular responses, performance was top of the list.
“In the eyes of the investor, the investment industry is falling short on what investors value most,” Suzanne Duncan, global head of research at State Street's new research centre, was quoted as saying. Moreover, Duncan said asset managers were failing to understand what investors mean by the term “performance.”
State Street had not responded to a request for more information on the report by the time of publication.
While the industry understood performance as delivering “benchmark-beating returns,” investors increasingly perceive it as either generating returns which outstrip the growth in their liabilities or by providing a hedge.
According to the report, some Middle Eastern sovereign wealth funds want to protect against the risk of declining oil prices, whereas retail investors might want to hedge against a downturn in their industry, which could leave them unemployed.
Meanwhile corporate social responsibility and ethical investment were cited as weaknesses by only a few investors. This suggests asset managers "may have focused more on these areas than their clients are demanding," the report said.
There is also a slight mismatch in terms of loyalty. While 87 per cent of providers believe investors are loyal to them, just 64 per cent of investors say they are, “potentially leaving a large slice of the $100 trillion industry up for grabs,” the publication said.