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Published byFrancine O’Neal’ Modified over 9 years ago
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Key Trends in Mutual Fund Innovation: Beyond Traditional Strategies Sonia Mata Senior Research Analyst sonia@sionline.com
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2 Uncertainty, Volatility Drive Search for “Alternative” Ways to Invest
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Close to Half of New Long-Term Open-End Funds Launched Year-to-Date are “Non-Traditional”
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Rethinking the Traditional 60/40 “Balanced” Portfolio The “Core” of Investors’ Portfolios increasingly Global and Risk Managed Developed markets no longer the only anchor of the “Core”: Emerging Markets shift from the periphery towards the center Changes in the Bond landscape drive shifts in the fixed income component The new “cores” increasingly include allocation to Non- Traditional asset classes and may incorporate Non- Traditional Strategies
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Post-Crisis Move Towards Portfolio Construction “Solutions” US vs. International Exposure Developed vs. Emerging Markets Dollar vs. Non-Dollar Traditional vs. Alternative Asset sleeves Long-only fully invested vs. Incorporating Short Positions and Cash More complexity drives advisers to seek “solutions” in the form of Global Tactical Asset Allocation (GTAA) funds or single asset-class Absolute Return-oriented unconstrained Strategies.
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Global Asset Allocation Funds Flow Pace Accelerates in 2012
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GAA: Significant Presence in Top Selling Equity Funds over Trailing 3 Mths as of 5/2012
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GAA also an Area of Vibrant Innovation
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Pre-Packaged AA Funds Witness Accelerating Flow Pace, in Aggregate, YTD in 2012
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Bond Fund Sales Explode in a Historically Low Interest Rate Environment
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30 Yrs of Falling Interest Rates Drove Extraordinarily Dependable Bond Fund Performance in Many Market Environments; Prospect of Secular Shift in Trend Drives Wave of Innovation
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Non-Traditional Bond Strategies: A Secular Innovation Theme though Flows Slowed after 1H11
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EM Stock Investing: Still High Risk Aversion + Intermittent Spikes in Global Stock Market Volatility + Many EM Fund PMs Facing Capacity Limitations ---- ˃ Sparks Balanced EM Fund Innovation
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Commodities Funds: Accelerating Flows Post-Crisis into ’40 Act Funds Providing Diversified Exposure; Budding Active, Long-Short Category
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Newly Launched Equity/Hybrid Funds Gaining Flows: Evolving Themes Global Flexible AA Multi-alternative, Long-Short / Market-Neutral Global Income-focused Equity and Multi-Asset Diversified EM Large-Cap US/Foreign Equity MLP / Global Real Estate
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New Active Equity/Hybrid Open-End Funds Gaining Traction
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Types of New Bond Funds Gaining Traction Short / Ultrashort Bond Flexible Global Bond Floating Rate Loan High Yield Bond Intermediate Investment Grade Emerging Market Debt
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Successful New Active Bond Open-End Funds
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Appendix
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Top 10 Selling Active US Equity/Hybrid Funds over Trlg 3 Mths - Prominent Themes are Large-Cap, Relatively Concentrated Style Box Portfolios; Income-focused Stock and Multi-Asset
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Top 10 Selling Active Intl/Glbl Equity/Hybrid Funds 3 Mths-5/12: GAA and Diversified EM Equity are Prominent Themes
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Top Selling Active Open-End Bond Funds over 3 Mths-5/12
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© Copyright 2012 Strategic Insight, an Asset International company, and when referenced or sourced Morningstar Inc. and Lipper Inc. All rights reserved. The information, data, analyses and opinions contained herein (a) include confidential and proprietary information of the aforementioned companies, (b) are provided solely for information purposes, and (c) are not warranted or represented to be correct, complete, accurate, or timely. Past performance is no guarantee of future results. The aforementioned companies are not affiliated with each other. This report has been prepared using information and sources we believe to be reliable; however, we make no representation as to its accuracy, adequacy or completeness, nor do we assume responsibility for any errors or omissions or for any results obtained from the use of this report, including any action taken with respect to securities referred to in this report. Our employees may from time to time acquire, hold or sell a position in securities mentioned herein. We may from time to time perform services for any company mentioned in this report. This report is not a prospectus or representation intended to use in the purchase or sale of any securities mentioned in this report. Strategic Insight is available by subscription and by single copy upon request to the publisher.
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