Not All Institutional Investors Are Alike

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Not_All_Institutions_Are_Alike

Uncertainty in China. Falling oil prices. Volatility in US equity markets. The Federal Reserve raising interest rates for the first time since 2008. All of these factors converge to create an unsettling environment for institutional investors. As a result, these investors are re-examining their portfolios and reassessing their use of different asset classes, investment products and asset managers. But the needs, perceptions and behaviors of institutional investors vary dramatically by asset size and category, proving the adage that not all investors are alike.

For asset managers serving the institutional market, the need for focus has never been greater. Determining the right business strategy, product offering and competitive positioning is to a great extent dictated by the segment of the market being targeted. Firms can choose to develop a scalable approach for the smaller institutions or pursue the polar opposite with customized solutions for the largest institutional clients. In either case, understanding the forces driving market needs and the factors impacting the competitive environment is critical. Continue reading

Larger Institutions Drawn to Smart Beta ETFs

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Larger Institutions Drawn to Smart Beta ETFs

Despite the vast array of product offerings and investment solutions available in the institutional market, institutional investors managing less than $1 billion in assets continue to favor two product categories—individual securities and open-end mutual funds—while organizations managing at least $1 billion in assets report higher allocations to separate accounts, commingled funds and limited/private partnerships, evidence of the wider variety of investment strategies these institutions employ. However, one category that has enjoyed substantial growth of late is that of ETFs. In fact, 37% of institutions now use ETFs, up from just 26% two years ago. Continue reading