Inside the Minds of Institutional Investors

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Inside the Minds Of Institutional Investors

Many asset managers targeting the institutional market often joke about their desire for a crystal ball that would provide foresight into the investment strategies that will be attracting the most assets in the next couple years. Armed with this knowledge, firms could then focus their efforts on developing and promoting their capabilities in the areas poised for the greatest growth. While not a crystal ball, our US Institutional Investor Brandscape® report provides a view into the key asset classes and investment solutions that are of most interest as well as the context that explains the factors driving demand for future mandates.

The allocation of institutional assets across asset classes has remained fairly stable over the past year, with smaller institutions concentrating their assets in US equities and US fixed income and larger organizations employing a more diversified approach. Yet we are seeing increased interest in investing in asset classes that offer higher potential return, such as private equity, real estate and alternatives. Continue reading

How Do You Take Your Money Management?

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How Do You Take Your Money Management?

Active versus passive management is an increasingly relevant subject to explore given the rise of ETFs and the ongoing debate about index funds. Some investors are active purists, seeking the alpha on performance that a professional manager or individual investor can potentially achieve, while others prefer to rely in part or completely on tracking market indices. Three segments with differing asset allocation models—100% active, 100% passive and active/passive blend—are alive and well among affluent investors.

Across the generations, Millennials (54%) are most likely to blend active and passive, followed by Gen Xers (48%) and 2nd Wave Boomers (47%). However, the likelihood of being 100% invested in actively-managed products increases with age, peaking at 48% among Silent Generation investors. Continue reading

Top-of-Mind Firms Among Advisors Seeking Active Managers

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American Funds, Franklin and BlackRock Have Top Advisor Mind Share as “Active Managers”


Recent fund flows reveal a competitive environment that has become increasingly favorable for passive investment strategies. That said, according to this year’s Advisor Brandscape® report, advisors continue to invest the majority of client assets in actively-managed investments (69%). With all of these actively managed dollars up for grabs, which firms are advisors most likely to consider? Continue reading

RIAs Driving Shift Toward Passive Management

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RIAs_Driving_ShiftRecent fund flows reveal a competitive environment that has become increasingly favorable for passive investment strategies. According to Cogent Beat Advisor, RIAs are primarily driving this trend. That said, with industry experts forecasting increased volatility in the year ahead, there is plenty of opportunity for active managers to tout the benefits of their firm’s distinctive investment philosophy and how they are uniquely prepared to address a growing number of economic issues worrying advisors and their clients.

While the proportion of overall advisor assets dedicated to passively-managed investments is up only slightly from 2013 (32% vs. 30%, respectively), a very different story emerges by channel.  Specifically, RIAs and Regional advisors alike have made significant increases to the portions of their books allocated to passively-managed investments since 2013.  Although advisors in the Bank channel have not increased their allocation to passive products over the past two years, it is worth noting that they continue to be among the heaviest users of these vehicles. Continue reading

Institutions Follow Through with Shifts to Passive Management

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A year ago, Cogent Reports™ projected that institutional investors would likely be increasing their passive investment holdings, primarily with an eye on reducing costs and a lack of faith that active management was providing that much added value. With our latest wave of US Institutional Investor Brandscape®, we find that investors have followed through with their stated intentions.

Although the majority of assets are still actively managed, there has been a significant decrease in allocation to active funds over the past year. Just over half (54%) of pension assets are actively managed, with more than one-quarter (27%) in passively-managed funds. Notably, pensions with $100 million to just under $250 million in assets report the greatest allocation to passive management, with more than one-third (36%) of their assets allocated to the category. In addition, one-quarter of corporate pension (27%) and public pension (25%) assets are now held in passive investments. Continue reading

Institutional Investors Shifting to Passive Management

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Institutional investors have long preferred active management over passive management for the investment managers and strategies they employ, but a recent study by Cogent Reports™ suggests change is in the air.

In particular, corporate defined benefit pensions and 501(c) tax-exempt organizations anticipate increasing their allocation to passively-managed investments over the next three years—a significant finding given that these two types of institutions collectively represent nearly half (49%) of the entire institutional marketplace.

Institutional Investors Question the Value of Active Management

When asked about the primary reasons for their forecasted shift to passive management, investors representing corporate pensions identify concerns about costs and fees as their top driver. Continue reading